Trade disputes within the US, with China, with the EU
- Italy exists in a political groundhog day, with negotiations to form a government of "anti" parties dragging on. Markets have been worried by reports of some rather extreme policies (like debt forgiveness), but the probability of such radical proposals being enacted is quite low.
- Ten-year US bond yields have drifted laconically above 3.1%. Civilization has not collapsed. Economies are not teetering on the brink of disaster. It is as if the difference between a 10-year yield of 3.1% and a 10-year yield of 2.9% meant nothing in the real world.
- Remarkably, the EU heads of government meeting actually did something, taking a firm line against the US on steel tariffs and Iran. The Iranian issue is focusing on the SWIFT payment system. Near term it is about trade tensions. Longer term, investors may want to consider who will set global regulatory standards. The retreat of the US leaves the way open for the EU.
- Sino-US trade negotiations continue. US President Trump's support for the Chinese company ZTE contrasts with the US position over Iranian sanctions. There are reports of significant disagreements within the US negotiating team, which give markets the enticing prospect of lots of leaks to play with.