The US stock market: trump blackmailing trade wars

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Markets returns alert tone. trump has put pressure on the equity markets, Recalling its readiness to impose duties on Chinese goods amounting to 325 billion, which returned to the markets are fears of the impacts of trade conflicts. Published on the eve of the fed’s Beige book noted a relatively positive growth forecasts, but also indicated that companies still find it difficult to shift increased costs to consumers. This, in turn, suppresses inflation.

The stock market

The US indices on Wednesday lost 0.5-0.7%. Index futures this morning continue to lose 0.2 percent, falling for the third day in a row. The SPX retreated under 3000. Moreover, the RSI has returned from overbought, which may further reinforce the short-term pressure. The anxiety of the market fueled by the weak reporting freight companies CSX Corp whose failure indicators are considered by investors as a signal of cooling of the world economy and reinforce the desire of investors to protective actives.

The Euro

The international monetary Fund said that the dollar is overvalued by 6%-12% based on short term fundamentals. The IMF rarely comments on courses, but because now there are growing fears that the administration of President trump would jump at this idea, increasing the pressure on the FOMC before the meeting at the rates in two weeks. At the same time, the Euro’s gains limited by expectations of easing from the ECB next week. Central banks continue to play a meaningless game “soften stronger than your neighbor”.
The yield on the us 10-year bonds are back to around 2%, reflecting increasing concerns about the pace of U.S. economic growth. The reporting season has just begun, but so far the results are weaker than expected. Further decline in the yields of long-term US government bonds can be a worrying signal to the markets, further strengthen the pressure on the stock, and cause the weakening of the dollar as investors seek higher-yielding assets.
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