Markets are continually confused with US trade policy as one official announces this then another comes out and denies that was said. It seems like the negotiating tactic is for Trump to come out and announce what they want to do in some extreme way , and then strategist Navarro and Treasury Secretary Mnuchin come out and try and roll things back to something a bit more realistic and responsible. I am not sure if this is done on purpose or if Trump just goes off at a tangent and the others come in to clean up the mess.
Whatever the tactics the markets in general do not like uncertainty and have been falling. US bond yields have been heading lower as investors move out of stocks and back in to the relative safety of bonds. In the face of the global uncertainty to do with trade , the US dollar has been moving higher as other havens such as JPY have weakened.
At present we see the Dow opening at 24319 up 0.2% , the S&P500 at 2726 up 0.2% and the Nasdaq at 7089 up 0.29%. I expect the stock indices to keep falling.
The USD has bounced sharply from lows earlier in the week with EUR at 1.1597 down 47 , the GBP at 1.3156 down 70 and JPY at 110.36 down 31. The US Dollar index is at 94.69 up 34. Gold is at 1255.50 down 0.27% and WTI crude oil is last at 71.24 up 1.0%. I expect to see the USD moving higher.
Durable goods orders came in negative in all categories , which was as expected.
This trade dispute and market confusion has the potential to cause a major correction to an overvalued stockmarket and with the Fed continuing to withdraw liquidity we could also see a spike in bond yields.
China could also cause the US some pain as it is the largest holder of US bonds and it could also allow its currency to weaken substantially.