Morning 8-19

Risk On

Two main reasons for strength in Stocks and risk and weakness in U.S. Treasuries

  2. China’s Central Bank has changed the way banks set lending rates, linking the loan prime rate to its medium term rate so it can directly move borrowing rates for companies (BN) a way to provide stimulus/ rate cuts in a new manner.

Other News driving flows:

Treasury floating the idea of 50 and 100 year bonds this weighing on ling end as Ultras -3 handles at one point down greater then four, Bonds -1.5 handles off worst levels of day. Yields show 30s +5.3Bps,10s +4.6 Bps and 2s +3.4  A steeper yield curve   2s-10s +1.18  trading at positive 8.5. Bunds -35 ticks yields +3bps Buxl -260 Yields +6 bps All Eurozone bond yields higher today

U.S. will ease sanctions on Huawei for an additional 90 days. Stocks in China closed higher Shanghai +2.1%, CSI 300 +2.27% Hong Kong +2.17%. In Europe Dax +1.5%,Italy’s Mib +1.7% All 19 stoxx 600 sectors higher, Spoos +1% Nasdaq +1.2%, Copper +.85%, CL +.5%. Hard pressed to find a stock market down on day. Gold down 1% as the flight away from safety weighs on prices.

 Grains down on day as Demand and Weather paint a bearish picture. Today starts the pro-farmer crop tour where Crop updates will happen daily a bit of volatility likely in the grain complex. China Hog herd down some 32% in July versus year ago levels.

Economic calendar light this week, the highlight will be Chairman Powell Speech on Friday morning. In Europe PMIs released Thursday morning and a good report may squash the Fiscal stimulus talk

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