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Here is what you need to know on Thursday, November 21:

Trade:  Markets have been  on thin ice  following a reminder from  Trump on Tuesday that tariffs would be raised if a deal  isn’t secured with China. Then, coupled with the US  bill backing Hong Kong democracy efforts which  sparked an immediate outcry from both HK and China warning of retaliation made for a negative start on Wall Street.

Indeed,  the market focus  remains squarely on China trade issues and Wednesday’s New York session, just ahead of the Federal Open Market Committee minutes,  came with a flurry of headlines that sent risk appetite lower, stocks to session lows and the yen & gold higher. A report by Reuters, entitled “Phase One US-China trade deal may not be completed this year – trade sources, hit the screens and subsequently polished the sentiment that  efforts to nail down the first phase of a broader deal are stalling. Shortly following the news, according to Fox News’ Edward Lawrence, White House Deputy Press Secretary, Judd Deere  said just now about a Phase One China trade deal: “Negotiations are continuing and progress is being made on the text of the phase-one agreement.”    Edward Lawrence also reported  that President Donald Trump, on his departure for Texas, said about a Phase One China Deal:

“China wants to make a deal. The question is: Do I want to make a deal? Because I like what’s happening right now. We’re taking in billions and billions of dollars.”

FOMC Minutes: These offered  very few  new morsels for markets around the  Fed’s monetary policy. The event underpinned the notion that there will not be any further cuts without signs of a slowdown.

Key notes from the minutes:  

  • Most judged level now appropriate barring a ‘material’ reassessment of the outlook.
  • ‘A couple’ said Fed should reinforce statement with communications that another rate cut unlikely without signs of a ‘significant slowdown’.
  • Many said rate cut warranted due to global weakness and trade uncertainty.
  • Some favored keeping rates steady and argued outlook was favorable and inflation expected to rise.
  • A couple supported rate cut but said it was a close call.
  • Several concerned some banks had reduced capital buffers when the should be rising.
  • Discussed that risks to the economic outlook remained tilted to the downside.

Looking ahead: There are  no major releases scheduled in Asia, although House floor votes on the HK bill will start during the session. For Europan markets, a number of ECB officials are due to speak, then Fed’s Kashkari and Mester spak ahead of BoC’s  Stephen Polo will speak in Toronto. The main focus, however, will  now be on Friday’s preliminary global PMI readings.