US investors have yet again put aside concerns of a serious trade war between the US and China , and have focused more on potential corporate earnings which begin with the big banks on Friday. The underlying strength of the economy and the continuing help to earnings from the Tax reform should allow earnings to grow strongly and stocks to be well supported.
Along with the move higher in stocks we have seen bond yields begin to move higher as the defensive positions are closed and the move back to growth assets grows.
The US Dollar has been climbing now for this week as the trade fears reduce and the fact that the US Fed is very likely to continue to slowly raise interest rates while in Europe and Japan that is very unlikely.
Latest prices show the Nasdaq100 index leading the pack at 7320 up 1.06% , the Dow index at 24838 up 0.58% , and the S&P500 index at 2787 up 0.52% with the tech sector leading and the financials lagging as they wait for results.
In FX the EUR is at 1.1680 up slightly , the GBP at 1.3222 up slightly as the Brexit white paper is released , and the JPY is last at 112.44 up 0.40%. The DXY futures are trading at 94.52 flat today after a move up overnight.
In economic date the US CPI was released showing an increase in prices of 0.1% m/m and 2.9% y/y which is highest in 6 years.
Markets remain wary of what China may do apart from any tariffs with some concern that they allow their currency to continue to weaken and that they may reduce the amount of purchases of US treasuries for a period.