November 26, 2019
In early October, when the President shook the hand of the Vice Premier of China in the Oval Office, I thought the intent was clearly to signal the end of the trade war (for the moment), to clear the overhang of uncertainty on markets, and move any further phases of negotiations to back burner issues for the global economy.
We’ve since had a melt-up in stocks. The market angst surrounding trade continues to ease. And with both of these as a backdrop, I suspect we’re going to be seeing a “re-rating” of the economic outlook.
The catalyst will first come in the form of positive economic surprises. And we have a slate of data coming tomorrow. We get reports on October durable good orders, the second look at Q3 GDP and inflation data (the Fed’s favored core PCE measure).
The hurdle of a formal deal signing clearly remains important. But assuming that comes — combine that with the ultra-accommodative stance of central banks, and we should expect the market to be on alert for hotter data, and signals that inflation might be on the move.
With that, among the winners today have been commodities. The economic bellwether, copper, was up 1.1% on the day.