Winds Shift on a Flurry of Positive News
Stocks are rallying for the third straight day and bond yields are moving higher on a combination of new-found trade optimism and a batch of improved economic data. China and the U.S. have agreed to resurrect high-level discussions next month. Although this announcement is vague and frustratingly familiar, it offers a much-needed glimmer of hope after five weeks of deteriorating relations. Recent economic data (until today) has mostly disappointed. On Tuesday, the ISM manufacturing index dropped below 50 for the first time in three years. The 49.1 August reading signaled mild contraction in the U.S. factory sector and indicated the negative effects of the trade war are worsening. However, today’s data (…and there was lots of it) raised eyebrows with surprisingly solid across-the-board numbers.