The Yuan is surging, alongside S&P futures, while the Japanese Yen has erased its gains and US Treasury futures are slumping on a Bloomberg report that China’s Vice Commerce Minister, Wang Shouwen, will lead a delegation to the U.S. in late August, the Ministry of Commerce says on website, adding that the visit comes at the invitation of the US.
Additionally, China reiterates that it opposes unilateralism and trade protectionism, and won’t accept any unilateral trade restriction measures. It also “welcomes communications and dialogue on the basis of equality and integrity.”
The news is quickly being interpreted by the market as a possible thaw in the trade war tit-for-tat, and has sent H-shares sharply higher, while S&P futures jumped 10 points:
And as the dollar index slides…
… the USDJPY is popped back in the green…
… while 10Y yields spiked to 2.875% and the USDCNH tumbled by 200 pips, from 6.9420 to just over 6.920.
In the general risk-on wave oil, which tumbled earlier on the massive DOE inventory build, has also caught a bid.
The news may explain why the PBOC fixed the onshore far stronger than the offshore yuan suggested, because as some desks have suggested, the last thing China will want when it comes to the US is a plunging Yuan.
So is this the end of the trade war? Hardly: after all, a Chinese delegation visited the US not that long ago, and just before Trump announced even more tariffs. Furthermore, why would Trump seek to end the “trade war” when the US is clearly winning based on the US vs Chinese stock market, and the divergence in economic growth.
For the time being, however, the market mood is clearly risk on.
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Author: Tyler Durden