Treasury Market Outlook: risk appetite has surged
Treasury Market Outlook: risk appetite has surged and U.S. equities futures and European bourses have extended higher. One major catalyst was the affirmation by China's commerce ministry that September trade talks are still on the table, even as the Trump administration made official its extra 5% tariff on $300 B in Chinese goods imports. China also indicated it won't retaliate. Concurrently, investors welcomed confirmation that Italy's Conte will get a second chance as PM and early elections will be avoided for now. In the UK, it looks near certain that opposition parities may try to bring down the government with a no confidence vote. The Eurozone ESI economic confidence index was unexpectedly revised higher, while German state inflation was in line with expectations. The DAX and FTSE 100 have posted gains of better than 1%, while the MIB is nearly 1.9% firmer. The Dow mini has reversed an early loss and is up 0.99%. The Nikkei and CSI finished slightly lower. Yields are mixed on various idiosyncrasies, with Treasury rates edging up from richer levels earlier with the 2-year now 2.6 bps higher to 1.526%, while the 10-year is up 1 bp to 1.489%. The Bund is 0.4 bps cheaper at -0.714%, while the Gilt is down 0.9 bps at 0.431%. There's a lot on the U.S. calendar today but global events will remain the focal point. On tap are the second release of Q2 GDP, weekly jobless claims, July advance goods trade, and advance July wholesale and retail inventories. The Treasury auctions $32 B of 7-year notes. The Fed's Daly said there are risks to running the economy hot in a speech at an RBNZ/IMF conference. Today's earnings calendar features Best Buy, Burlington Stores, Dell, Dollar General, Dollar Tree, Marvell Technologies, Cooper Companies, TD Bank, Ulta Beauty, and Workday.