The ‘Pain Trade’ Anesthesia Was Patience All Along: Taking Stock

The good news this morning is that the gains seen on the back of the FOMC decision Wednesday are holding, even through what could have been disruptive official PMI figures from China. Italy also fell into a recession, but the U.S. for its part has largely ignored this factor.

China’s figures instead pointed to a stabilizing deterioration, according to Bloomberg Economics’ Chang Shu and David Qu. Its important to view its growth in the context of the high-level trade talks with the U.S., which are set to finish today. BI Economic Research estimates that the current tariffs will trim 0.5% off China’s GDP over the course of the year, though China has launched a "proactive" fiscal policy to massage growth. To what extent these opposing forces work against one another may be key in determining how successful the talks go. Markets will likely be in a holding pattern until reports start to shade the outcome later today.