Equities led by the energy shares traded higher as all are awaiting new developments in the increasingly unpredictable Sino-American trade war.  The 10-year Treasury closed around a three year low yield of 1.45% and the 30-year remained under 2.0%.

Most have now acknowledged the market is one headline or tweet away from triumph or tragedy emphasizing the massive impact of technology based trading is having upon the markets.  More are beginning to acknowledge the potential hazards of algorithmic and passive trading.  The question at hand will any reform occur before a major issue arises?

Today the first revision of second quarter GDP is released.  Consensus is expecting little change…a 2.0% growth rate.  This is neither robust nor recessionary.  Most will discount any forward looking indicators given that the third quarter is already 66% over and data released to date is suggesting an accelerating economy, the inverse of the bond market and media narrative.

Yesterday a headline on CNBC read “A Countdown to Recession.”  It is a well-known axiom that every forecasted recession has not occurred.

Also released are initial jobless claims, the trade gap, inventories and pending home sales.  Will the data influence the perception of the economy or are all myopically focused on one topic…the trade war which to date has not greatly impacted the overall economy.  It has been more noise than substance.

Last night the foreign markets were mixed.  London was up 1.03%, Paris up 1.33%  and Frankfurt up 1.10%.  China was down 0.33%, Japan down 0.09% and Hang Sang up 0.34%.

The Dow should open  relatively higher as China said it would not immediately retaliate against the latest trade measures. The 10-year is off 3/32 to yield 1.49%.


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