Stocks rebound after Trump predicts China talks will be 'very successful'

If China Sells Its U.S. Bonds Trump Will BenefitMore

If China Sells Its U.S. Bonds Trump Will BenefitMore

For another, Treasury yields would rise and thus cause prices to fall, lowering the value of China's portfolio. The dollar rose and Treasuries fell. Long considered a risk to the USA economy, this CNBC article takes a detailed look at what would happen in China engaged in this "nuclear" option. Shares in Japan and South Korea opened lower and S&P 500 Index futures dropped 1.1 per cent. Moves in currencies extended early Monday and Treasury yields retreated as trading began. The benchmark is still down more than 4 per cent since the president escalated the trade war on May 5. "We do anticipate, as the secretary indicated yesterday, that we will plan for a meeting in China at some point soon". Commodities West Texas Intermediate crude fell 1.1% to $61.13 a barrel.Gold was steady at $1,297.54 an ounce.

"Investors are looking for opportunities to get into this market, and so far in 2019 there really haven't been any "buy the dip" opportunities other than last week", Ryan Nauman, market strategist at Informa Financial Intelligence, said by phone.

Also, Trump said he had a feeling talks with China will be "very successful" and that he meant to meet his Chinese counterpart Xi Jinping at next month's G20 summit. "And you're also seeing President Trump confirmed a meeting with President Xi during next month's G-20 summit, which provides some optimism that despite the increase in tariffs, negotiations are still ongoing". However, China has the upper hand when it comes to the money market.

Elsewhere, oil prices advanced Tuesday as traders eyed Middle East woes, "sabotage attacks" on two Saudi Arabian oil tankers, and a growing crisis in Venezuela. Bitcoin strengthened past US$8,000, extending its longest winning streak since 2013.

Earnings this week include Vodafone, Alibaba, Tencent, Cisco, Nvidia. Kansas City Fed President Esther George and Richmond Fed President Thomas Barkin also make appearances.

And there's the question of where China would put its money - all that cash would have to go somewhere, and USA bonds are among the highest-yielding in the world when weighed against their relatively low risk.

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The S&P 500 dropped the most in four months, the Dow Jones Industrial Average slumped more than 600 points and the Nasdaq Composite saw the biggest decline of the year after China targeted some of the nation's biggest exporters.

Australian unemployment is out on Thursday. It touched ¥109.47 against the dollar on Thursday, its highest since February. The offshore yuan held at 6.9079 per dollar. South Korea's Kospi index lost 0.9 per cent.

Germany's 10-year yield was unchanged at -0.07 per cent.

The MSCI Emerging Market Index decreased 0.1 per cent.

Britain's 10-year yield was little changed at 1.105 per cent.

That being said, spot USDCNH is estimated to gyrate between 6.8548 and 6.9566 with a 68 percent statistical probability over the next 5 trading days judging by USDCNH 1-week implied volatility of 6.30 percent.

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