Signs of progress are lifting stocks but currencies, Treasuries are less amused
Alongside more positive Chinese credit data from Friday, the headlines above are also helping to allow Asian equities to hang on to their gains for the day. However, currencies and Treasuries are not really reacting in the same light with risk currencies and the yen barely changed on the day – aside from the kiwi – while Treasury yields are actually lower as we move towards European trading.
Among the reports above, the one on a possible pact to stem off currency manipulation/intervention is what catches my eye. However, I would only believe it should we hear the same from Chinese sources rather than Mnuchin. I reckon that’s the same perception that the market has on any talks of progress between US and China on trade.
Until both sides start communicating the same message, I remain on the skeptical side on actual progress being made for the time being. That said, given there’s little else on the economic calendar today and little else to focus on, markets could still turn towards a further extension of Friday’s risk-on rally (focus remains on improved Chinese credit data).
But if anything, I wouldn’t count on it lasting throughout the week.