Here we go again, the never-ending Sino-Yankee trade deal or no deal saga.
This from Bloomberg: "Chinese officials are casting doubts about reaching a comprehensive long-term trade deal with the U.S. even as the two sides get close to signing a "phase one" agreement."
"In private conversations with visitors to Beijing and other interlocutors in recent weeks, Chinese officials have warned they won't budge on the thorniest issues, according to people familiar with the matter. They remain concerned about President Donald Trump's impulsive nature and the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks."
No doubt, Trump being Trump, expect a counter-attack that repeats the historical pattern of US-China trade negotiations since it began in 2018 - rhetoric from both sides building hopes for a deal only to be followed by escalating trade protectionism and greater threats (and outright imposition) of more to follow.
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Uh-oh. US Federal Reserve chair Jerome Powell wouldn't be too happy with this new development.
In his press conference - after the FOMC cut the fed funds rate a third time in as many meetings to 1.5%-1.75% -- Powell shared his optimism over the outlook for the economy - "It's for moderate growth, a strong labor market, and inflation near our 2% objective" - that justifies his forward guidance to a pause in rate cut proceedings.
Given latest data and developments, it's looking a lot like a short pause.
This is because, in Powell's own word: "The principal risks that we've been monitoring have been really slowing global growth and trade policy developments. As well as muted inflation pressure. So, I was really referring there to trade developments."
Well, we know the latest about "trade developments".
Muted inflation pressure. The Fed's inflation gauge - the PCE price index - has since been updated since the Fed's October 31 assessment and rate cut. The headline PCE inflation eased to 1.3% in the year to September from 1.4% in the previous month; the core PCE price inflation rate decelerated to 1.7% from 1.8% over the same period.
Not only that, inflation expectations - as measured by the yield differential between 10-year Treasuries and Treasury Inflation Protected Securities (TIPS) - have fallen to 1.54% at the end of October from this year's high of 1.97% (April).
The Fed's monitoring this because as Jerome explains: "inflation expectations are very important in driving actual inflation."
The Fed has signalled that it's taking a breather for now. It could be a short one.