12-3

 Risk Off due to trade Worries

  1. TRUMP SAYS I HAVE NO DEADLINE ON CHINA DEAL AND IT MIGHT BE BETTER TO WAIT UNTIL AFTER NOVEMBER 2020.
  2. U.S. vows 100% tariffs on French Champagne, cheese, handbags over digital tax– The U.S. government on Monday said it may slap punitive duties of up to 100% on $2.4 billion in imports from France of Champagne, handbags, cheese and other products, after concluding that France’s new digital services tax would harm U.S. tech companies (Reuters)

 A bit Of color per Bloomberg  Risk parity trades ,trades that don’t like volatility  have has delivered two of its worst days of year back -to –back, so a bit of position unwind causing gyrations in the market. Dow -.84%, Spoos -.7% Stoxx -.2%,Cac -.7%(Due to U.S. Tariff Spat) and Dax little changed. Gold Bid Bunds and treasuries clawing back most of yesterday’s losses, Jpy up a touch a bit of surprise. Remember that Trump re-imposes tariffs on Argentina and Brazil yesterday so trade battles not decreasing .Economic calendar empty today.

From Morgan Stanley  Why is FX volatility so low? As the implied volatility for some currencies like EUR and AUD trade close to the lows of 2007, we thought we would address the most common client question – why is FX volatility so low? We see FX implied volatility as a function of 1) global risk/equity volatility expectations and 2) country divergences. Both forces have played against FX volatility in the past year, with a higher weight on global divergences (or the lack of them). Without a large growth, inflation or money supply differential, cross-border asset and trade flows have fallen, putting downward pressure on currency volatility

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