Jamie McGeever
8 min read
In This Article:
By Jamie McGeever
ORLANDO, Florida (Reuters) - TRADING DAY
Making sense of the forces driving global markets
By Jamie McGeever, Markets Columnist
I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.
The US and China have reached a trade deal, or at least agreed on the framework of a deal, which together with surprisingly soft U.S. inflation data, gave markets a lift on Wednesday. But Wall Street's gains were mild, and they were later wiped out by rising tensions in the Middle East.
In my column today I look at the 'equity risk premium' and other metrics that suggest relative U.S. equity and bond valuations are getting very stretched. More on that below, but first, a roundup of the main market moves.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. China's latest trade truce with US leaves investors nonethe wiser 2. Dollar keeps losing market share but euro slow tobenefit: ECB study 3. US importers turn to brokers to navigate Trump-eratariffs, at a cost 4. When it comes to a US debt default, never say never 5. No longer the big outlier, Italy sees bond renaissance:Mike Dolan
Today's Key Market Moves
* Wall Street ends in the red, having earlier hit highslast seen in February-March. The S&P 500 falls 0.3%, the Nasdaqloses 0.5%. Consumer cyclicals sector falls 1%, and energy isthe best-performing sector up 1.5%. * U.S. stock market volatility, as measured by the VIXindex, falls to its lowest in almost four months earlier in theday. * Treasuries rally, also boosted by soft inflation and astrong 10-year auction. Yields end down as much as 7 bps, curvebull steepens slightly. * Oil hits a two-month high, rising more than 4% aftersources say the US is preparing to evacuate its Iraqi embassydue to heightened security concerns in the region. Brent crudereaches $69.77/bbl, WTI rises above $68/bbl. * Precious metals rise, led by a surge in platinum to a4-year high above $1,280/oz. Platinum rose as much as 5% and isup over 20% in June, which would be its best month since 2008.
Good vibrations turn sour
It's a "done" deal, according to U.S. President Donald Trump, although the he and Chinese leader Xi Jinping still have to finalize the wording of the trade agreement between the two superpowers and sign off on it.
The main points of the deal appear to be: China will remove export restrictions on rare earth minerals and other key industrial components; U.S. tariffs on Chinese goods will total 55%; Chinese tariffs on U.S. goods will total 10%.
