China moves the goal posts (again).
There has been another change in the trade negotiations with China...as China is now asking for a scaling back of some existing tariffs as a prerequisite for signing the "Phase One" deal. We thought this might knock down the market a little bit, but the Administration has indicated that this demand is not a problem...and that negotiations are moving forward.
This time, however, the Administration looks like it's going to cave-in.
A roll-back in tariffs would be bullish for growth, but it will also weaken the negotiating hand for the U.S. in the future. Thus is not a good deal for the U.S. over the longer-term. In other words, it looks like the President is wimping out due to the upcoming election (and the upcoming impeachment hearings)...and will only get what China was always willing to give (the purchase of ag products).
Long-term bond yields back near critical resistance levels.
This news on the trade front helped long-term bond yields rise yesterday...and took them back up near their critical resistance level. Therefore, any further rise in yields would confirm that the intermediate-term trend for long-term interest rates has changed......In other words, the important technical levels we highlighted in the stock market yesterday are not alone. The bond market also continues to stand at a crucial juncture. Therefore, the action over the next week or two in MANY different markets will be VERY important for market action over the rest of this year (and into early next year).
To get more details on what we're talking about...and to learn the levels were talking about on bond yields (and several global stock markets), please click here to subscribe to my market newsletter, "The Maley Report" (TheMaleyReport.com).
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
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