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European shares end the session with decent gains

Yields are higher in Europe today

The European major indices are closed and the numbers are positive on the day:
  • German DAX, +0.77%
  • France’s CAC, +0.34%
  • UK’s FTSE, +0.6%
  • Spain’s Ibex, 0.66%
  • Italy’s FTSE MIB, +0.6%
In the 10 year note sector today yields are also higher but yields are still depressed.
Yields are higher in Europe todayThe German 10 year yield is below the 2016 low at -0.189% still.
German tenure

Eurostoxx futures +0.4% in early European trading

Optimistic tones in early trades as the positive risk mood spreads to Europe

  • French CAC 40 futures +0.4%
  • UK FTSE futures +0.5%
  • Spanish IBEX futures +0.5%
This mirrors sentiment seen in US equity futures which are up by about 0.3% to begin the session. The positive risk mood comes as Trump indefinitely suspends tariffs against Mexico in an announcement over the weekend.
Do be reminded that some markets are closed in Europe today, with the DAX not trading in observance of Whit Monday. Hence, thinner liquidity conditions may prevail in the session ahead before North American traders join in the fray.

Nikkei 225 closes higher by 1.20% at 21,134.42

Tokyo’s main index climbs on improved risk sentiment in markets

Nikkei 10-06

Asian stocks are on the up today as markets are cheering the fact that Mexico manages to avoid tariffs – for now – from the US following Trump’s announcement over the weekend. That has helped put risk assets in a good mood to start the week with global equities sentiment improving and Treasury yields also higher on the day.

USD/JPY sits at 108.62, up by 0.4%, as the yen is seen slightly weaker but also as the dollar is gaining solid ground; retracing some of Friday’s losses.

Goldman Sachs w/e note – USD/CNY to break 7 in three months (forecasts)

While we await the reference rate setting for the onshore yuan, forecasts from a note from GS:

Goldman Sachs expects the yuan
  • in 3 months at 7.05
  • in 6 months at 6.95
  • in 12 months at 6.80
GS cite yuan to fall to partially offset higher US tariffs. Adds that Chinese policy makers are reluctant to have it above 7 … “psychologically important level”

FT: EU to warn business not to expect help over a no-deal Brexit

The Financial Times report that the European Commission will tell firms to prepare for a no deal Brexit on October 31.

EU will say do not expect any help to cushion the impact of a no-deal Brexit. Companies should “take advantage of the extra time” to prepare.
  • The commission told a closed-door meeting of national officials last week that the probability of a no-deal exit had increased given the announcements made in the Tory leadership contest.
Link here, may be gated.

G20 finance ministers do not want to urgently resolve trade war

Yes, really. Not fussed. They paid lip service to the impact of the accelerating trade war:

  • growth remains low and risks remain tilted to the downside
In their previous communique they said they:
  • “recognize the pressing need to resolve trade tensions”
But this time ’round that was dropped.
They do, however, ‘stand ready’:
  • Global growth appears to be stabilizing and is generally projected to pick up moderately later this year and into 2020
  • However, growth remains low and risks remain tilted to the downside. Most importantly, trade and geopolitical tensions have intensified. We will continue to address these risks and stand ready to take further action
Clue.
Less.
Via Reuters (who say the clause was dropped due to US pressure)

Just waking up? Missed the big weekend news (Mexico tariffs delayed indefinitely).

MXN is higher in super-thin early trade here in Asia.

After markets closed on Friday we got news that US President Trump had indefinitely delayed his extra tariffs on Mexico.
  • Trump says deal reached with Mexico – tariffs indefinitely suspended
ICYMI – the tweets:
MXN is higher in super-thin early trade here in Asia. 
For the majors, impact felt in yen. USD/JPY has been as high as 108.65+