• Financial markets continued with a positive sentiment driven mainly by the optimism on the US-China trade relationship and the potential to avert another US government shutdown. Hopes for an ease in trade frictions rose after Trump said that the March 1st deadline to increase tariffs on Chinesse imports could be delayed if significant progress is made during the highlevel trade talks that will start tomorrow. However, a meeting between US and China leaders must be set in order to reach any final agreement.
  • Against this backdrop, the positive performance continued across developed equity markets. US and European stocks were up once again with the US equity implied volatility VIX at levels below 20%. Similarly, Asian equity indices benefited from the positivism on trade developments.
  • Sovereign core yields ended little changed: US yields inched up all along the curve with the US Treasury 10Y yield hovering around 2.70% after the release of slightly higher-than-expected inflation prints. These prints came after the comments from Kansas City Fed President Esther George, which showed support on the Fed’s “wait-and-see” mood on rate hikes. In Europe, despite the weak industrial production data, the German 10Y Bund yield remained broadly steady.
  • The USD recovered its recent lost ground letting the EUR to depreciate ahead of tomorrow’s 4Q18 GDP figure for Germany. Most EM currencies depreciated, with Latam currencies underperforming once again despite the increase in oil prices. The ARS depreciated ahead of tomorrow’s release of the CPI figure.

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