Stocks climb on US-China trade optimism, Treasuries edge up

Bloomberg

US equity-index futures advanced with European stocks while Asian shares rose modestly as investors weighed hopes for high-level trade talks next month between America and China against mixed economic data from around the globe. The pound rose after a court ruling key to Brexit.
Contracts on the three main US equity benchmarks all pointed to a firm open after Treasury Secretary Steven Mnuchin confirmed Chinese Vice Premier Liu He is headed to Washington in coming weeks and China was said to have given waivers for tariff-free American soy purchases.
The Stoxx Europe 600 Index climbed, though automakers slipped as German prosecutors brought market manipulation charges against Volkswagen AG executives. Shares gained in Tokyo, Hong Kong and Shanghai, and were little changed in Sydney. The pound climbed after the UK Supreme Court said Prime Minister Boris Johnson’s suspension of Parliament was unlawful. Treasuries edged higher and European bonds were mixed.
Despite tensions easing between the US and China, markets remain on edge ahead of planned high-level talks between the world’s two biggest economies in October.
Underwhelming economic indicators are muddying the picture — downbeat numbers from Japan and mixed data from Germany were stark reminders of the fragility of global growth. And political risks loom large for investors, including a Congressional investigation into President Donald Trump’s dealings with Ukraine and Brexit.
“All eyes are on early October, although there’s not a lot of expectation that anything material is going to come out from it,” John Lau, head of Asian equities at SEI Investments Co, said of the trade talks in an interview with Bloomberg Television. “If we get some kind of deal, any kind of deal, that would actually move markets.”
Meanwhile, Federal Reserve Bank of St Louis President James Bullard said the central bank may need to ease monetary policy further to offset downside risks from trade conflicts and too-low inflation.
Not all policy makers are on the same page, though. People’s Bank of China Governor Yi Gang said the country isn’t in a rush to add massive monetary stimulus, while Francois Villeroy de Galhau admitted he opposed the ECB’s decision to restart quantitative easing.
Chicago Fed President Charles Evans will discuss the economic outlook and monetary policy in Illinois on Wednesday.
Decisions are due on Wednesday from central banks in New Zealand and Thailand.
Core PCE — the Fed’s preferred inflation measure — is forecast for 1.8 percent. That’s due on Friday.
Futures on the S&P 500 Index increased 0.4 percent in New York. The Stoxx Europe 600 Index increased 0.3 percent. The Shanghai Composite Index gained 0.3 percent. The MSCI Emerging Market Index was little changed.
The Bloomberg Dollar Spot Index was little changed. The euro was little changed at $1.0991. The British pound jumped 0.3 percent to $1.2462. The onshore yuan advanced 0.2 percent to 7.107 per dollar. The Japanese yen declined 0.1 percent to 107.69 per dollar.
The yield on 10-year Treasuries fell two basis points to 1.71 percent. The yield on two-year Treasuries gained less than one basis point to 1.68 percent. Germany’s 10-year yield decreased less than one basis point to -0.58 percent. Britain’s 10-year yield dipped less than one basis point to 0.551 percent. Japan’s 10-year yield sank three basis points to -0.234 percent.
West Texas Intermediate crude dipped 1 percent to $58.04 a barrel.