Opening Bell: Trump's Trade Threats End Stock Rally; Yields Eye Breakout

Yields on 10-year Treasurys consolidated despite yesterday’s bullish equity rally. Technically, the rate is forming a pennant, bearish in a downtrend, right on the very neckline of a double top reversal. The downside breakout would complete both the patterns suggesting a penetration below 3%.

The dollar is charging ahead for a third day, breaking its tie to Treasurys. A further 0.5 percent rise would take it to the highest level since June 2017.

Meanwhile, Bitcoin is nearing our $3,000 target at $3,766 as the time of writing. Could a slowdown in cryptocurrency mining be triggering the collapse?

WTI crude inched lower but remained above $51.00, while Brent fell back towards $60 a barrel—though both bounced back in the late European morning.

The upcoming G20 summit, which begins on November 30 and Fedspeak will bring the two most significant headwinds in the spotlight to this late business cyclet: Sino-US trade relations and the US interest rate tightening path.

Fed Chairman Jerome Powell’s speech on Wednesday in particular will be closely watched for the latest thinking on the central bank's tightening pace, as investors remain on the back foot amid heightened volatility and try to second-guess whether there will be a pause in rate hikes next year.

As to the former point, Trump's latest tariff threat to China may further pressure a market that is already under strain. However, a resolution would undoubtedly carry a much bigger payoff, potentially propelling equities back into their longest bull market on record.

• Presidents Donald Trump and Xi Jinping plan to meet at the G-20 summit in Argentina that kicks off on Friday.
• Federal Reserve Vice Chairman Richard Clarida speaks in New York on Tuesday and Powell addresses the New York Economic Club on Wednesday.
• Thursday sees the release of the minutes from the Federal Open Market Committee’s November meeting.

Stocks

• The MSCI All-Country World Index climbed less than 0.05 percent to the highest in more than a week.
• The MSCI Emerging Market Index fell less than 0.05 percent.

Currencies

• The Dollar Index gained 0.12 percent for the third day and 0.48%, to the highest close in two weeks.
• The euro declined 0.2 percent to $1.1308, the weakest in two weeks.
• The Japanese yen decreased less than 0.05 percent to 113.60 per dollar, the weakest level in more than a week.
• The British pound fell 0.6 percent to $1.2747, the weakest level in four weeks on the most significant drop in more than a week.
• The MSCI Emerging Markets Currency Index slid 0.2 percent to the lowest level in almost two weeks on the most substantial decrease in more than two weeks.

Bonds

• Germany’s 10-year yield declined two basis points to 0.34 percent, the lowest level in 12 weeks.
• Britain’s 10-year yield fell three basis points to 1.375 percent, the lowest level in more than a week.
• The spread of Italy’s 10-year bonds over Germany’s increased two basis points to 2.9245 percentage points.

Commodities

• The Bloomberg Commodity Index slipped 0.6 percent to the lowest level in 17 months.
• LME copper fell 1.1 percent to $6,118.00 per metric ton, the lowest level in almost two weeks on the biggest fall in a week.
• Gold dropped 0.2 percent to $1,220.19 an ounce, the weakest level in more than a week. Investors will likely wait to see whether Trump's trade tariffs threats translate into action before deciding on their direction.