The US and China are ramping up trade wars, overshadowing a speech by Jerome Powell.

It was all going swimmingly, until Trump decided to respond with a series of dramatic tweets regarding China. The tweets, ‘ordering’ US firms to seek alternatives to China, prompted a swift reversal in equities, which had been moving higher after a Powell speech that made all the right noises. Trade wars are certainly back, and this will no doubt push the Fed towards more accommodative policy. Both the Fed and China are in the president’s sights, which means that markets face a volatile few weeks, if not longer. Even a rate cut in September will likely be insufficient to appease the White House, meaning that investors should expect a volatile autumn. 

A fresh record high has been seen in US utilities today, as the SPDR Utilities ETF climbs ever higher, continuing one of the most consistent rallies of the past decade. And with US bond yields going lower, along with global manufacturing PMIs, there seems to be more upside here. Perhaps there will eventually be talk of a bubble in utility stocks, an intriguing counterpart to the tech bubble of 20 years earlier. 

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