It is all about the rumour mill in trading today
In case you missed out on the related headlines:
- China reportedly said to be open to partial US trade deal despite tech blacklist
- China reportedly said to propose increased agricultural purchases to ease trade war
- Pound jumps on report that EU is said to be ready to make major Brexit concession
- Brexit: DUP said to have already shot down latest EU concession offer
- DUP's Donaldson: We would clearly oppose reported EU compromise offer
What a fun European morning, eh? The reaction in the pound doesn't come as too much of a surprise when you scrutinise the reported offer from the EU. Cable is now back at flat levels on the day just under 1.2220 as it surrenders all gains after the jump higher earlier.
However, the risk mood continues to be buoyed by the earlier reports from Bloomberg and the Financial Times with equities holding higher alongside bond yields.
I'm not doubting the enthusiasm being shown to get a partial trade deal and in all aspects, it is a positive for global trade but all this does is slap a plaster on top of a cracking dam. It isn't going to be the solution to stop the impending flood.
When you look at it, there's incentive for both China and Trump to get a partial trade deal done. The former wants to limit the damage and toll taken on their economy while the latter wants to secure reelection next year.
In the long run though, with no structural issues being addressed, this isn't a game changer whatsoever. A temporary truce/ceasefire doesn't spell the end of things. Just consider how the Trojan War panned out in Greek mythology.
