But as we discussed, the linchpin remains U.S./China trade (i.e. this standoff is what matters).  Why?  If we get a deal, we have the ingredients for an economic boom-period.  And economic prosperity can solve a lot of problems (i.e. to reduce or even resolve risks elsewhere in the world).  

On the other hand, the longer it drags out, the more damaging it becomes to the global economy, and the less likely we see a deal. That path leads to very ugly outcomes (puts economic depression and global war in play). 

Given the significance of this binary outcome, we talked yesterday about the prospects of seeing movement on the U.S./China trade front in the next week or so.  The prospects were slim. Chinese political leaders are convening at their annual seaside policy strategy summit. 

But what did we get today?  We got movement.

The movement was modest.  But with a phone call, and some U.S. walk-back, the market view on a U.S./China trade deal went from a “maybe no deal happens,” to “maybe a deal happens.” 

The break of this stalemate is reported to have been pursued by Trump.  That seems obvious, given how fragile markets looked coming into the morning.     

So, with a positive China headline, we had a sharp bounce in stocks, and a sharp decline in gold, which fell from new-six year highs made overnight. 

What didn’t race back so aggressively?  Yields.

German 10-year yields traded to new record lows, and closed near the lows.  U.S. yields traded up 10 basis points, but remain 37 basis points off of the highs of August 1, when Trump ramped up the threats with this tweet …