Market Insights: Key Developments Ahead
(Reuters) – A look at the day ahead in European and global markets from Wayne Cole.
Treasury yields and the dollar are down and most stocks a shade higher in Asia as investors wait to see if last gasp talks will prevent the U.S. government shutting from Wednesday.
Expectations don’t seem high for a deal when President Trump meets with the top Democratic and Republican leaders in Congress later on Monday, with both sides seeing political capital in letting the government close.
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Analysts at BofA estimate a closure would cost 0.1% of GDP per week, but would be made up when it re-opens. Historically, such shutdowns have had little impact on financial markets, perhaps because investors assume public pressure will ultimately force a deal.
The timing is awkward for markets given that a closure would delay the September payrolls report due on Friday, and a protracted shutdown could leave the Federal Reserve flying blind when it meets on October 29. So far, markets assume that would not stop the Fed from easing, pricing in an 89% chance of a cut.
Wednesday is also when Trump’s new tariffs on big trucks, patented drugs and other items are due to go into place, though there remains much confusion about what exactly will be covered or whether existing country deals will take precedent.
Reuters reported the Trump administration is considering imposing tariffs on foreign electronic devices based on the number of chips in each one, though again how that would work in practice is anyone’s guess.
Trade partners must be wondering what’s the point of doing deals with Trump when he can just slap new levies on anything out of the blue.
It’s a busy week for Trump who on Tuesday is reportedly attending the meeting of top U.S. military brass suddenly called by Defense Secretary Hegseth last week.
“I want to tell the generals that we love them, they’re cherished leaders, to be strong, be tough and be smart and be compassionate,” Trump told Reuters in an interview, making the point of the meeting no clearer.
Social media is abuzz with theories, ranging from Hegseth wanting to extol the generals to follow a “warrior” culture, to him asking the military leaders to swear an oath to Trump personally. There’s even talk the White House has decided to pull the U.S. military back from Europe and Asia to concentrate on the Americas alone.
Investors will be hoping nothing drastic happens this week to cloud the fourth quarter, which historically is a bullish one for equities. The Nasdaq, for instance, has on average returned gains of more than 6% in the December quarter. World stocks are already up 17% for the year, worth a cool $15 trillion. Gold and Chinese tech are the biggest winners, both up almost 40%.
Market Insights: Key Developments Ahead
(Reuters) – A look at the day ahead in European and global markets from Wayne Cole.
Treasury yields and the dollar are down and most stocks a shade higher in Asia as investors wait to see if last gasp talks will prevent the U.S. government shutting from Wednesday.
Expectations don’t seem high for a deal when President Trump meets with the top Democratic and Republican leaders in Congress later on Monday, with both sides seeing political capital in letting the government close.
Invest in Gold
Analysts at BofA estimate a closure would cost 0.1% of GDP per week, but would be made up when it re-opens. Historically, such shutdowns have had little impact on financial markets, perhaps because investors assume public pressure will ultimately force a deal.
The timing is awkward for markets given that a closure would delay the September payrolls report due on Friday, and a protracted shutdown could leave the Federal Reserve flying blind when it meets on October 29. So far, markets assume that would not stop the Fed from easing, pricing in an 89% chance of a cut.
Wednesday is also when Trump’s new tariffs on big trucks, patented drugs and other items are due to go into place, though there remains much confusion about what exactly will be covered or whether existing country deals will take precedent.
Reuters reported the Trump administration is considering imposing tariffs on foreign electronic devices based on the number of chips in each one, though again how that would work in practice is anyone’s guess.
Trade partners must be wondering what’s the point of doing deals with Trump when he can just slap new levies on anything out of the blue.
It’s a busy week for Trump who on Tuesday is reportedly attending the meeting of top U.S. military brass suddenly called by Defense Secretary Hegseth last week.
“I want to tell the generals that we love them, they’re cherished leaders, to be strong, be tough and be smart and be compassionate,” Trump told Reuters in an interview, making the point of the meeting no clearer.
Social media is abuzz with theories, ranging from Hegseth wanting to extol the generals to follow a “warrior” culture, to him asking the military leaders to swear an oath to Trump personally. There’s even talk the White House has decided to pull the U.S. military back from Europe and Asia to concentrate on the Americas alone.
Investors will be hoping nothing drastic happens this week to cloud the fourth quarter, which historically is a bullish one for equities. The Nasdaq, for instance, has on average returned gains of more than 6% in the December quarter. World stocks are already up 17% for the year, worth a cool $15 trillion. Gold and Chinese tech are the biggest winners, both up almost 40%.
Markets on Edge as U.S. Government Shutdown Looms
(Reuters) – As the clock ticks down to a potential U.S. government shutdown on Wednesday, global markets are holding their breath. In Asia, Treasury yields and the dollar have dipped, while most stocks are slightly up, reflecting a cautious optimism among investors. The uncertainty stems from last-ditch negotiations set to take place later today between President Trump and congressional leaders from both parties.
Despite the high stakes, expectations for a breakthrough remain low. Analysts suggest that both Democrats and Republicans may see political advantages in allowing the government to close, potentially complicating efforts to reach a consensus.
Bank of America analysts estimate that a shutdown could cost the U.S. economy about 0.1% of GDP per week, although they believe this loss would be recouped once the government reopens. Historically, such shutdowns have had minimal impact on financial markets, as investors often assume that public pressure will ultimately force a resolution.
However, the timing of a shutdown could not be worse for the markets. It threatens to delay the September payrolls report, which is due on Friday, and could leave the Federal Reserve without crucial economic data ahead of its meeting on October 29. Currently, markets are pricing in an 89% chance of an interest rate cut, regardless of the shutdown.
Adding to the uncertainty, Wednesday also marks the implementation of new tariffs on big trucks, patented drugs, and other items. Confusion surrounds the specifics of these tariffs, including whether existing trade agreements will take precedence. Reports suggest that the Trump administration is considering tariffs on foreign electronic devices based on their chip content, though the logistics of such a measure remain unclear.
Trade partners are left questioning the reliability of agreements with the Trump administration, given the unpredictability of new levies.
This week is particularly busy for Trump, who is set to attend a meeting with top U.S. military leaders called by Defense Secretary Hegseth. In a recent interview, Trump emphasized his admiration for military leaders, urging them to be “strong, tough, smart, and compassionate.” However, the purpose of the meeting remains ambiguous, leading to speculation on social media about its true intent.
Investors are hoping for stability as they look toward the fourth quarter, which has historically been a bullish period for equities. The Nasdaq, for instance, has averaged gains of over 6% in December. So far this year, world stocks have risen 17%, adding a staggering $15 trillion in value, with gold and Chinese tech stocks leading the charge, both up nearly 40%.
As the day unfolds, key developments that could influence markets include EU consumer and business sentiment surveys, various countries reporting September CPI, and speeches from European Central Bank and Federal Reserve officials.
With uncertainty looming, all eyes are on Washington as the fate of the government—and potentially the markets—hangs in the balance.
