A quiet start to the trading day

WCRS 26-11

Risk trades got a minor boost earlier after Xinhua reported that the US and China have reached a consensus on a deal, but gains were fleeting as markets settle into a more neutral tone as we look to begin European morning trade.

This "consensus/broad consensus" talk has been going on for the better part of two days now but so far there hasn't been any official word if both sides have finally cleared all the hurdles needed to get to a "Phase One" deal.

Regardless, the reaction in markets may indicate some feeling of being top-heavy after having to price in the optimism bit-by-bit since October.

Major currencies are little changed on the day with dollar pairs less than 0.1% changed at the moment. Meanwhile, US futures have also turned flat following earlier gains with Treasury yields also adopting a similar sentiment.

The overall mood is telling that there needs to be more official commentary for markets to push further with the trade optimism seen since the weekend.

However, at the same time, there is a bit of potential weariness in risk trades and that could see a possible "buy the rumour, sell the fact" play if the deal doesn't deliver on key structural issues - which it won't.

IMF chief Kristalina Georgieva summed it up rather nicely yesterday: A trade truce is not the same as trade peace.