US-CHINA: Tsy Secretary Bessent To Meet China Officials Next Week - Rtrs
Headlines have crossed from Reuters that US Tsy Secretary Bessent will meet with China officials, including Vice Premier He Lifeng, in Spain next week. The discussions are expected to cover - "trade, economic and national security issues". Tiktok is also expected to be discussed per Rtrs.
- This comes after China officials reportedly visited the US in late August (per the WSJ).
- US Tsy Secretary Bessent stated earlier in August that the trade 'status quo' was working pretty well. This comes amid the various trade truces that have paused reciprocal tariff rates for 90 days (which expires in Nov).
- Focus is also likely to remain on a potential Trump-Xi summit, but this may be conditional on how far trade negotiations progress.
- The Washington Post reported earlier: " A rush of high-level diplomacy between United States and Chinese officials this week has stoked expectations that President Donald Trump will meet Chinese leader Xi Jinping as soon as next month, amid festering tensions over trade and defense."
- Headlines have also cross this week around US efforts calling for G7 countries to raise tariffs on China and India over Russian oil purchases (via the FT).
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US TSYS: Cash Open
TYU5 is trading 111-24+, down 0-01+ from its close.
- The US 2-year yield opens around 3.73%.
- The US 10-year yield opens around 4.295%, up 0.1 from its close.
- MNI US Inflation Insight: Core Goods Spike Fails To Emerge. The July CPI report saw further acceleration in monthly core inflation but it was driven by the volatile supercore category. Instead, core goods inflation, an area of focus for tariff passthrough clues, was surprisingly soft. This category only maintained the still-solid monthly clip seen in June, whilst median core goods inflation moderated after a strong increase in June. Core CPI inflation was exactly in line with the median unrounded analyst estimate we had seen for July at 0.32% M/M, accelerating from 0.23% in June and 0.13% in May for its strongest month since January.
- US DATA: NFIB Small Business Price Plans Cool. The NFIB small business index was stronger than expected in July despite weakness in the already published jobs details. Notably despite this slightly firmer backdrop, price plans cooled rather than accelerating further.
- Price action in the long-end is a little disconcerting for the bulls though the 10-Year yield still trades below its 4.30/35%% pivot within the wider range 4.10% - 4.65%. There should still be buyers of treasuries on bounces back towards 4.30/35%, looking to initially test the 4.10% area.
- Data/Events: MBA Mortgage Applications
MNI: JAPAN JULY CORP GOODS PRICE INDEX +2.6% Y/Y; JUNE UNREV +2.9%
- MNI: JAPAN JULY CORP GOODS PRICE INDEX +2.6% Y/Y; JUNE UNREV +2.9%
- JAPAN JULY CORP GOODS PRICE INDEX +0.2% M/M; JUNE REV -0.1%
NEW ZEALAND: Gradual Recovery In Retail Card Spending
July NZ card transactions rose 0.6% m/m, the highest monthly increase this year, but the annual rate is still down 1.0%. Retail spending was up 0.2% m/m rising 1.2% y/y, signalling a gradual recovery in nominal consumption. It has been trending higher since the March trough at -1.8% y/y. The RBNZ is likely to cut rates on August 20 as inflation is in the band and the economic recovery remains subdued, and the July card data was consistent with this.
- While total retail spending rose slightly on the month, the core was close to flat. Statistics NZ noted that consumables transactions rose 0.5% m/m, while vehicles ex fuel jumped 5.2%. Apparel fell 1.9% and durables -0.8%.
- Non-retail ex services expenditure increased 1.6% m/m but services only 0.3%.
NZ card spending y/y%
Source: MNI - Market News/LSEG
