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Equities spill over into Bond and FX


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FOREX: The confluence of strong regional data releases and an FT source story
re: Sino-U.S. trade talks breathed life into risk appetite. Australian trade
surplus rose to A$4.801bn from A$4.351bn vs. a forecasted decline to A$3.700bn,
while retail sales accelerated to +0.8% M/M, more than exp. The pair of key
Aussie prints came just before the FT reported that U.S. and China "have
resolved most of the issues standing in the way of a [trade] deal," albeit
noting that the two parties remain divided over U.S. tariffs on China &
enforcement mechanisms. Finally, Chinese Caixin services & composite PMIs topped
exp., with the services gauge touching its best levels since Jan 2018.
- AUD topped the G10 pile as a result, with NZD lagging its Antipodean cousin.
- JPY posted losses vs. all of its G10 peers, as the aforementioned risk-on
flows came to the fore. The Nikkei 225, last seen ~0.9% higher on the day, had a
look into negative territory, before rallying to the present levels.
- Focus today turns to global composite & services PMIs, U.S. ADP employment
change & EZ retail sales. Fed's Bostic, George and Barkin will speak on one
panel, ahead of addresses from their Fed colleague Kashkari and ECB's de Cos.