President Trump's comments downplaying the urgency aren't indicative of talks falling apart

Highlights:

Market Update: U.S. stocks dropped yesterday on news that the trade deal may be delayed. The S&P 500 dropped -0.66%. The Dow Jones Industrial Average finished the day down -280 points. Volatility, treasuries, and gold were all higher. Crude oil and the CRB commodity index was also up on the day. U.S. 10-year Treasury note yields dropped 11 basis points. Transports were the worst performing stocks on the day.

 

Top Three Things:

U.S. 10-year Yields: Bond yields dropped significantly, falling 11 basis points yesterday. Long-term bonds surged in response. Bond yields have been in a steady downtrend since late 2018. Are they heading to new lows?

Commodities: The CRB index rallied yesterday despite the fall in risk assets. The CRB index remains below its 200-day moving average and is well below the peak set in mid 2018. This index is indicative of a continued negative trend in inflation.

Transports: The Dow Transportation Average is close to testing its 200-day moving average. It failed right at resistance and has failed to confirm the new highs set by the Dow Industrial Average. In Dow Theory terms, this is considered a negative non-confirmation.

Chart of the Day: Groundhog Day

 

Futures Summary:

 

News from Bloomberg:

The U.S. and China are closer to agreeing on the amount of tariffs to be rolled back in a phase-one trade deal even amid tension over Hong Kong and Xinjiang, people familiar said. President Trump's comments downplaying the urgency aren't indicative of talks falling apart. U.S. negotiators expect an agreement to be completed before American tariffs rise on Dec. 15. Here's a look at how Trump's $28 billion farm bailout may be overpaying farmers.

NATO latest: The leaders are meeting today before they wrap up an occasionally testy summit. The draft communique shows leaders want a happy Trump, with burden sharing in focus. In terms of threats, Russia got top billing, with terrorism second. The meeting also highlighted the rise of China. Trump said he and Boris Johnson had a good tête-à-tête behind closed doors.

OPEC+ gave mixed messages. The cartel agreed prolonged output cuts are needed but was less clear on deepening them. Iraq reiterated the curbs should rise by 400,000 barrels a day and said Saudi Arabia supports the move. But an OPEC advisory committee didn't discuss steeper cutbacks, people familiar said. In the U.S., stockpiles dropped 3.72 million barrels last week, the API is said to have reported.

Carl Icahn urged HP Inc. to press on with takeover talks with Xerox. A tie-up may yield more than $2 billion in synergies, he said in a letter to HP shareholders. Icahn, who owns stakes in both, was perplexed by HP's decision to stonewall Xerox. HP's standalone plans amount "to little more than rearranging the deck chairs on the Titanic," he wrote.

U.S. stock futures turned higher with shares in Europe as trade concerns eased. A risk-off tone had engulfed global markets earlier on heightened uncertainty. Treasury yields rose. The pound climbed as polls showed the Conservatives increased their lead and the euro edged lower after manufacturing data. Oil gained and gold edged lower.