US shares remain in a trend, while China's hopeful statements are little in the way of alleviating increasing concerns that the first step trade deal talks will fail, as the Congress is expected to sign legislation protecting Hong Kong protestors. He has stated that he is "cautiously optimistic" that he will reach the Phase I deal with the United States, but has confused some of the US demands. A Dow Jones report noted that last week, China sent an invitation to Secretary of the Treasury Mnuchin and Lighthizer's representative for further talks. S&P 500 futures soared to session highs after the report.
In the Christmas trade miracle, investors are still pricing because the Hong Kong bill appears to be a big hurdle on the path that complicates, but doesn't overrule, the ongoing trade negotiations. The bill would allow Hong Kong to review the State Department's special autonomous status each year. China's human rights abuses officials will also be subject to sanctions. Signing the bill will make the relationship between the US and China more complicated, but it could be as bad as it sounds because the bill punishes Hong Kong rather than the country.
The bulk of yesterday's earnings are held by Oil as trade war developments generate more confusion about when a phase-in agreement is reached. China's optimistic speech does not account for fears that President Trump will sign a bill to support protests in Hong Kong. The timing of the first step agreement is uncertain, but we could see the failure of the talks held in May become increasingly nervous to the markets.
The rising geopolitical risks in the Middle East may cause oil prices to continue to be supported. When instability in Iraq and Iraq increases, WTI could easily challenge the $60 region.
On a sight full of trade news, Gold prices tend to coil. While world stocks are slightly weaker and the returns on bonds are increasing, gold is struggling to rally today. The basic case seems that even after President Donald Trump signs legislation to support Hong Kong protesters, we are still seeing a phase-one deal. Higher prices for gold will need instability with the US economy, in particular, further deterioration of business perceptions and labor market softness.
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