November 13, 2017, by Lorcan Roche Kelly
Trump meets Asian leaders as tax debate continues in Washington, OPEC head calls for more production cuts, and what next for the bond market? Here are some of the things people in markets are talking about today.
President Donald Trump met with Philippine leader Rodrigo Duterte in Manila in a sign of improving relations after Duterte used unparliamentary language in a reply to President Obama’s criticism of his war on drugs last year. Trump also held a three-way meeting with Australian Prime Minister Malcolm Turnbull and Japanese Prime Minister Shinzo Abe today. Back in the U.S. the debate over the tax bill continues, with House Republicans pushing back against the Senate proposal to eliminate deductions for state and local taxes.
Production cuts are the “only viable option” to restore stability to the oil market, OPEC Secretary-General Mohammad Barkindo said before producers meet on Nov. 30 to decide whether to extend the current output deal. A barrel of West Texas Intermediate was trading at $56.70 at 5:40 a.m. Eastern Time after capping a fifth weekly gain on Friday. One of the other big stories for oil-watchers continues to be the Saudi Arabian Oil Co. IPO, with Chief Executive Officer Amin Nasser telling reporters this morning that there is still no decision on how much of the company will be offered, or where the listing outside of the kingdom will be.
The Treasury curve was the flattest in 10-years as Federal Reserve rate hike expectations push up short-end yields and lowflation suppresses the longer end. Some analysts are warning that the last time the curve was this flat it was followed by an 18-month recession, with Lacy Hunt, chief economist at Hoisington Investment Management, seeing a good chance of an inverted yield curve as soon as a year from now. Others have started placing tactical bets that the curve will start to steepen amid forced selling and other technical factors as investors take a breather from the hottest trade in the world’s biggest bond market.
Overnight, the MSCI Asia Pacific Index declined 0.6 percent, with Japan’s Topix index closing 0.9 percent lower while the Nikkei 225 Stock Average tumbling 1.3 percent. In Europe, the Stoxx 600 Index was 0.3 percent lower at 5:40 a.m., with London’s FTSE 100 index gaining as the pound fell. S&P 500 futures were 0.1 percent lower, the 10-year Treasury yield was at 2.375 percent and gold was slightly higher.
Bitcoin extended a slide from last week’s high to as much as 29 percent over the weekend, recovering some of those losses to trade at $6,402.85 by 5:40 a.m. The latest sell-off in the cryptocurrency came after a technology upgrade was cancelled, which meant some investors switched to other digital cash. Part of the recovery in bitcoin prices this morning may be due to short covering, with Bitfinex — the world’s second-largest cryptocurrency exchange — saying current short positions are at their lowest level since July.