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China media highlight “signs of better communication between the world’s two biggest economies”

  
Analysis, Politics

Via Caixin this report on the meeting in Switzerland between China’s top diplomat Yang Jiechi snd U.S. National Security Adviser Jake Sullivan.

The meeting was held on Wednesday

Says Caixin:

  • the latest sign of improved communication between Beijing and Washington. 
  • The two sides discussed areas where the U.S. and the China have an interest in working together to address vital transnational challenges, and ways to manage risks in bilateral relationship, according to a readout published by the White House. 
  • The meeting followed up a phone conversation between Chinese President Xi Jinping and U.S. President Joe Biden on Sept. 10. 
Link to the piece is here (may be gated). The key takeaway is of course a little more communication between the two. US President Biden and China’s President Xi have subsequently agreed to a summit meeting (virtual) later in 2021.
Via Caixin this report on the meeting in Switzerland between China's top diplomat Yang Jiechi snd U.S. National Security Adviser Jake Sullivan. 
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Yang Jiechi is a member of the Political Bureau of the Communist Party of China Central Committee and director of the Office of the Central Commission for Foreign Affairs.

US Indices catch a late bid to finish at the highs of the day

  
Analysis, US Market

Debt ceiling optimism turned the market

The GOP offer of a two-month debt ceiling extension — even if it’s not accepted — is a strong signal that the US isn’t going to default. Despite all the talk and games, US politicians aren’t going to let the banking system crumble because of some stupid political games. They’re great at getting the market to fret though.
  • S&P 500 +20 points to 4365 (+0.5%)
  • Nasdaq +0.5%
  • DJIA +0.3%
We’ve really carved out a range over the past week.
Debt ceiling optimism turned the market

Putin: Russia is prepared to help stabilise global energy market

  
  Analysis

Putin to the rescue

  • Russia is increasing gas exports to Europe
  • Russia is a dependable source of natural gas for Europe, Asia
  • Russia’s gas shipments to Europe might reach new highs

Energy prices are taking a plunge on the headlines as Russia steps in to help Europe with the energy crisis. Here’s a look at natty:

UK gas prices were quick to frontrun the announcement though, as they pared an advance of around 40% earlier to just 4% prior to the headlines crossing.
I reckon this will help to keep the calm in the market for a short while but we’ll see how things go once we get closer to winter. I don’t think the surge in energy prices is quite over yet and we’ll only get a better idea of that in the weeks ahead.
Oil is also dragged lower as a result with WTI now down 1% to around $78.

10-year Treasury yields push to highest since mid-June

  
  Analysis

10-year yields up 4 bps to 1.57%

USGG10YR

That is the highest since 17 June as bond sellers are starting to put up a display that they are still in the driver’s seat as we get things going in the new week.
For me, this is where things start to get interesting as the technical breakout from two weeks ago did flash signs that yields would be headed towards 1.60% or perhaps 1.70%.
Inflation expectations may be in part at play here with the energy crisis likely to worsen going into winter, especially in Europe and the UK.
Brent has pushed past $82 and WTI is clipping $79 already since yesterday and are also impacted by the surge in energy prices in general.
Going back to the bond market, the US non-farm payrolls this week is going to be a big one to watch out for. A strong report will rebuff Fed expectations of a taper and coupled with high inflation that we’re seeing, gives policymakers more flexibility in talking up rate hikes as a combative tool heading into next year.
For now, yields closing in on 1.60% may weigh more heavily on tech stocks so be wary of that and overall equities sentiment considering how things have been looking rather weary over the past few days – in spite of the gains posted yesterday.
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