Limited Price Action Does Not Do Justice To Macro Developments

Overview: The global capital markets are subdued despite several macro developments. The US and China may announce as early as today when the two presidents will meet to ostensibly sign a trade deal, while House of Commons’ effort to block a no-deal exit goes to the House of Lords today. India cut interest rates by 25 bp, the second consecutive cut. German factory orders slumped 4.2% in February, the most in two years. Equities were mixed in Asia, and the Dow Jones Stoxx 600 is snapping a four-day advance. US shares are trading softer, and the S&P 500 has a five-day rally in tow, reaching new six-month highs yesterday. Bond yields are mostly softer, though Australia and New Zealand were outliers in the Asia Pacific, and Italy is an exception in Europe. Yesterday the 10-year Bund yield rose above zero for the first time in a week, but after the factory orders disappointed, it is back in negative territory. The dollar is little changed, though generally firmer. Late in the European morning, most of the major currencies are +/- 0.15% from yesterday’s US close.

Asia Pacific

China and the US may announce a meeting for Xi and Trump to meet and sign a new agreement. In fact, if an announcement is not made today, the disappointment may weigh on the capital markets. According to reports, China will have until 2025 to meet the commitment to commodity purchases and allow US businesses to own wholly-owned subsidiaries in China. The US is pushing to front-load commodity purchases with benchmark objectives for 90 and 180 days. There are said to be some other non-binding promises to be delivered by 2029, but there is no threat of retaliation if the goals are not met, until the 2025 deadline, for which the US retains the

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