US announced to delay tariffs on some items from China until December 15th including mobile phones, laptops, computers, video games, certain toys, computer monitors, some footwear and clothing items, while USTR also noted that some products are being removed from the China tariff list and that the products will not be subject to the additional 10% tariff based on health, safety, national security and other factors.

US President Trump confirmed that tariffs were delayed for the Christmas season in case it had an impact on shopping and that he has always been optimistic about a China trade deal. Trump also commented that stock markets are up for a few reasons including tariffs and that his call with China was very productive, while he suggested that so far China has not bought "big" from US farmers and that "maybe this will be different". (Twitter)

China Global Times cited experts in which it noted that delaying 10% tariff on China's electronic products shows Beijing’s retaliation measures, with yuan’s depreciation, have been taking a bigger-than-expected toll on US economy amid the trade war and that it is pushing the US to show a goodwill gesture to create environment for trade talks. (Twitter)

China's Vice Premier Liu reportedly spoke with USTR Lighthizer and Treasury Secretary Mnuchin. There were also reports that China’s MOFCOM reportedly did not agree to anything in return to US President Trump's December 15th Tariff delay on certain goods and stated that further US-China talks are planned in the next 2 weeks. (Xinhua/Twitter/Fox)

A court issued an injunction to remove Hong Kong protesters, while there were also reports of severe disruptions at Hong Kong’s airport due to a public assembly and that Hong Kong police was said to have entered the airport terminal with riot gear in which they used pepper spray against protestors. (Newswires)

China's Mission to the UN rejected the UN's statement on Hong Kong and criticized it as interfering in China's domestic affairs which sends the wrong signal to violent criminal offenders. Furthermore, China alleged that Hong Kong protesters are "showing a tendency of resorting to terrorism", while there were separate comments from the Global Times Editor that Beijing intervention in Hong Kong could be inevitable. (Newswires/Twitter) 



The legal bid to stop UK PM Johnson from forcing a no-deal Brexit by suspending parliament will have a full hearing on September 6th. (Politico)

US & Britain are discussing a partial trade agreement which could take effect on November 1st which is 1 day after the Brexit according to a senior Trump Official, while an official also stated that US National Security Advisor Bolton and UK Trade Secretary Truss talked about the potential for signing a road map declaration towards a trade deal at the G7. (Newswires)

Italian Senate rejected League's call for a no confidence vote in parliament on Wednesday and are to debate the no confidence motion in parliament on August 20th, while it was also reported that Deputy PM Salvini proposed accepting 5SM's demand to reduce the number of politicians quickly but added that Italy must then hold elections. (Newswires)

German Parliament 2020 draft budget foresees no net debt increase and Germany to issue EUR 234bln in gross debt in 2020 (from EUR 185bln Y/Y), while reports noted that Chancellor Merkel does not see any need for fiscal stimulus at the moment and will act according to the situation. (Newswires)



API Crude Inventories +3.7mln vs. Exp. -2.8mln (Prev. -3.4mln). (Newswires)



Iran Foreign Minister Zarif says insecurity in Persian Gulf is caused by US intervention and that foreign fleets in this region "increases risks of combustion", while he also stated that the US' proliferation of arms in our region is a menace to regional security. (Newswires)





Sour risk sentiment reversed after the US open on news that the US would be delaying some tariffs on Chinese imports that were due to become effective on 1st September. There are some questions about the motivations of the move; while it can be spun as a de-escalation of trade wars, Trump justified the move in case it had an impact on shopping during the Christmas season, suggesting it was more about domestic politics rather than a move to appease China. Nonetheless, the announcement saw risk assets bounce (stocks moved into positive territory, Treasuries went negative), while EMFX gained against the USD, and the bid in havens deflated. All sectors closed green, with defensive utilities underperforming. Tech shares outperformed after the delayed tariffs were announced for many tech items, and as it is a key sector which holds exposure to China given the semiconductor presence. The Computer and Electronics Retail sub index outperformed. As the haven bid deflated, gold gave back some gains, which weighed on the Gold sub index. Homebuilders were higher following initiations from SunTrust, with new buys for DR Horton (DHI) & Pulte (PHM), and new holds for Lennar (LEN) & Toll Brothers (TOL). Elsewhere, General Electric (GE) firmed after its CEO purchased USD 3mln of shares. Micron Technologies (MU) and other semiconductor names benefited as US President Trump delayed some tariffs on items, such as mobile phones, laptops & computers -- products which use chips. Apple (AAPL) traded higher on positive trade developments too, however, it’s Airpods, Homepod and Apple Watch do remain on the list of September 1st tariffs. S&P 500 +1.5%, NASDAQ 100 +2.2%, DJIA +1.4%.

The Treasury curve bear-flattened in Tuesday trade. There was much attention on the 2s10s part of the Treasury curve, which came to within 1 bps of inversion, before US/China news allowed a bounce. However, at settlement, the gap is around 2bps, keeping the threat of inversion alive. The 3m/10-year part of the curve was also in focus, but is already inverted, of course; the gap here went as deep as -40bps in overnight trade, but has pared back to around -33bps amid more constructive risk sentiment. The long-end of the curve continues to gain attention, with yields down to fresh 37-month lows. This has also been a focus of equity traders; with regards to the 10s sector, Goldman Sachs noted that the S&P 500 currently offers a trailing 12-month dividend yield of 2.0% – higher than the 10-year US Treasury yield for the first time since October 2016. At settlement, major US curve spreads had tightened, with 2s30 narrowing by around 6bps. US T-note futures (U9) settled 17+ lower at 129-26+.

13 Aug 2019 - 22:54- ForexResearch Sheet- Source: Newswires

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