Trade Optimism And Oil Recovery Boost Risk Appetite

Overview: Optimism on trade talks between the US and China coupled with the biggest rally in in two years (11%+) have helped keep the equity market recovery intact. The rose today, the eighth time in the past ten sessions, while the Dow Jones in Europe is closing in on its second consecutive weekly advance. The has a five-day rally in tow and is likely to extend its gains for a third consecutive week. Benchmark 10-year yields are mostly softer, though on the week, core bonds are little changed. In Europe, peripheral bonds and France saw premiums over Germany shrink. The is heavier against all the majors but sterling. On the week, the greenback has slipped against all the majors, with sterling and the yen the laggards, while the dollar-bloc and the leading the way higher. The is the strongest currency on the day rising about 0.75%, and on the week, with its nearly 2% advance.

Asia Pacific

China’s Vice Premier Liu He will travel to Washington at the end of the month and meet with US Trade Representative Lighthizer and Treasury Secretary Mnuchin for the next round of trade talks. It seemed easy for the mid-level team of negotiators to agree to buy more low value-added energy and agriculture goods from the US because China previously agreed before President Trump rejected the agreement. The non-tariff barriers, including technology transfers, require higher levels talks, but the underlying optimism stems from ideas that the blowback to the stock market has given the US Administration a greater sense of desire for a deal, even if the strategic competition for regional and global influence is not addressed.

Despite a 2% year-over-year rise in November in Japan, the most in five months, household spending slumped 0.6%. Economists had expected recovery from a 0.3% decline in

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