The US government remains shut down, but the trade negotiation part of the government is still working. Commerce Secretary Ross was sounding upbeat about a China deal. Markets are hurt more far more than the economy by trade taxes, but it might take more than soundbites on CNBC to convince investors that a deal can be done.
Fed President Bostic cited a possible trade deal as a positive risk for the US economy. Bostic suggested only one hike may be needed this year. Bostic has no vote on the FOMC but the Fed does seem intent on taking a pause to contemplate and reflect. US monetary policy is going very Zen.
German industrial production data is due, for November. The problems of the German auto sector are still a factor, but the sector was recovering faster than expected. German retail sales data released yesterday surprised positively.
There are reports that UK Prime Minister May is attempting to make a no-deal exit more difficult. The law of the land is that the UK must exit with no deal on 29 March. To change that requires a new Act of Parliament. Markets would like less no-deal risk. Economists would like this all to be over.