US-CHINA: US Public Sentiment More Positive On China Ahead Of Trump-Xi Meeting
US public sentiment may be shifting back towards a more positive view of China, according to a new survey from the Chicago Council on Global Affairs. The report found that “the bipartisan embrace of US-China competition no longer holds among the public, with partisan differences in perceived threats from China and disagreements on current US-China trade policy.”
- The report notes, “While Republicans continue to favor limiting China’s rise, as well as reductions in trade, and view US-China trade as detrimental to US national security, Democrats have moved in the other direction. Driven by shifts among Democrats and Independents, a majority of Americans now favor a policy of cooperation and engagement with Beijing, oppose higher tariffs, and oppose cuts to bilateral trade.”
- Lingling Wei at the WSJ writes that US President Donald Trump is “poised to relaunch the kind of engagement with Beijing embraced by predecessors from Bill Clinton to Barack Obama—but on Trump’s terms.” Wei notes that Trump's second-term engagement with China is more pragmatic, writing on the expected trade truce extension, "Beyond high-level diplomacy, the truce sets the stage for a tactical stabilization of the relationship over the next year."
Figure 1: American Views of China (100 = more favourable)
Source: Chicago Council on Global Affairs
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GBPUSD TECHS: Remains Below Resistance
- RES 4: 1.3789 High Jul 1 and key resistance
- RES 3: .3661/3726 High Sep 18 / 17
- RES 2: 1.3537 High Sep 23 1
- RES 1: 1.3485 50-day EMA
- PRICE: 1.3421 @ 16:12 BST Sep 29
- SUP 1: 1.3324 Low Sep 25
- SUP 2: 1.3282 Low Aug 6
- SUP 3: 1.3254 Low Aug 4
- SUP 4: 1.3144 38.2% retracement of the Jan 13 - Jul 1 bull cycle
GBPUSD traded lower last week, marking an extension of the current bear cycle that started Sep 17. The move down has resulted in a break of 1.3491, a trendline support drawn from the Aug 1 low. This undermines a recent bullish theme. Note too that 1.3333, the Sep 3 low and a key support, has been pierced, opening 1.3282 next, the Aug 6 low. Initial key resistance to watch is 1.3537, the Sep 23 high. A break of it would signal a reversal.
BONDS: EGBs-GILTS CASH CLOSE: Bull Flattening As Euro Inflation Week Unfolds
European curves bull flattened Monday.
- Bull flattening started early, with a looming federal government shutdown in the US setting a cautious undertone.
- BOE's Ramsden sounded to be on the dovish side in an appearance and does not appear to be guiding away from a vote for a November cut so far.
- Data didn't have a major market impact. Spanish flash September core HICP was slightly softer than expected, while Eurozone economic confidence slightly above-consensus. BOE credit data was largely in-line.
- UK instruments slightly outperformed German counterparts across most of their respective curves, with the most notable divergence being at the short end.
- Periphery/semi-core EGB spreads closed mixed, with France underperforming amid continued fiscal uncertainty (Friday saw Spain upgraded by Fitch/Moody's and France's outlook lowered by Scope).
- The Eurozone flash September inflation round continues Tuesday with French, German and Italian data, with the bloc-wide figure out Wednesday. MNI's preview is here. We also get UK GDP data Tuesday, as well as several central bank speakers including BOE's Breeden and Mann, and ECB's Lagarde.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 0.7bps at 2.023%, 5-Yr is down 2.3bps at 2.312%, 10-Yr is down 3.9bps at 2.707%, and 30-Yr is down 5.6bps at 3.272%.
- UK: The 2-Yr yield is down 2.7bps at 3.988%, 5-Yr is down 3bps at 4.145%, 10-Yr is down 4.6bps at 4.7%, and 30-Yr is down 5.2bps at 5.509%.
- Italian BTP spread down 0.9bps at 82.6bps / French OAT up 0.5bps at 82.7bps
US: FED Reverse Repo Operation Rising Into Month End
RRP usage climbs to $56.220B ahead month end with 26 counterparties this afternoon from $48.073B Friday. Compares to $11.363B on Friday, September 16 - lowest level since early April 2021. The year's high usage stands at $460.731B on June 30.
