Trade talks between the U.S. and China ended without resolution last week resulting in President Trump continuing his Twitter offensive warning China that it “would be wise” on its part to wrap up negotiations quickly and could not help throw a jab adding “but love collecting BIG TARIFFS!” This was in seeming contrast to his calmer series of deleted then reposted tweets on Friday morning in which he said there was “absolutely no need to rush” a trade deal with China. US stocks all closed in the green for the first time in the week recording gains of 0.44%, 0.08% and 0.37% for the DOW, NASDAQ and S&P respectively. Yield on 10Y USTs closed at 2.445%.
Chinese state media blamed the US for a lack of progress in trade talks with the People’s Daily – the flagship newspaper of China’s Communist Party – having a front-page commentary in which it said that the US is responsible for the holdups because it reneged on its word and imposed more levies on Chinese products. This was in consonance with what Vice Premier Liu He said in a wide-ranging interview after talks on Friday. Asian stocks traded in the red in the morning with the CSI 1% down while the Nikkei lost 0.5%.
Theresa May is hoping to rope in the EU to help breathe life into the faltering Tory-Labour Brexit talks. Her office announced this Sunday that the government will explore with the EU the rewriting of the future customs ties in an effort to appease interest of the two parties. Some senior Labour officials are however warning that its members will not support a deal without a second referendum. The pound closed at 1.2993 against the dollar while yield on 10Y UKTs was at 1.1337%.
François Villeroy de Galhau, governor of France’s central bank has called on ECB’s monetary policymakers to improve their public relations to keep the populace onside and hence maintain trust in the single currency. France’s top central banker is one of the leading contenders to head the ECB as Mario Draghi’s tenure comes to a close and signaled that he is unlikely to make drastic changes to policy should he get the top job, saying the eurozone was “making progress” in meeting the inflation target of just under 2%. The euro was little changed at $1.1229 and yield on 10Y DBRs closed at -0.045%.
Oil was up starting this weekend trading over 71 a barrel amid rising tensions in the Gulf. Saudi Arabia said two of its oil tankers came under attack near the UAE while the UAE itself said four of its vessels had been sabotaged. In a statement Saudi energy minister Khalid Al-Falih said there were no casualties or oil spills but the attacks resulted in significant damage to the structure of the vessels. Of note, one of the tankers was supposed to load Saudi crude headed for the US. Iran, despite the incidences having occurred nowhere in its proximity, weighed in with a spokesperson for its Ministry of Foreign Affairs calling for “clarification of the exact dimensions of the incident,” having earlier threatened to disrupt shipping through the Strait of Hormuz.
Reports in Brazilian press are saying President Jair Bolsonaro could remove the capitalization program proposed by Economy Minister Paulo Guedes as part of the pension reform proposal if it facilitates approval by the Congress. This comes as Guedes himself had confirmed that “waters are parting” for pension reform due to greater process of society accepting the government’s agenda. The President’s concessions could be one of many to come as he hopes to push the reform in Congress. BRAZIL 47s closed at 98.989.