For all of President Trump’s tough talk on China, I just had to laugh when I saw this:
The White House on Tuesday said it would delay imposing tariffs on Chinese imports of cellphones, laptop computers, video game consoles, and certain types of footwear and clothing until Dec. 15, significantly later than the Sept. 1 deadline President Trump had repeatedly threatened.
The announcement, which came from the Office of the U.S. Trade Representative, ensures that Apple products and other major consumer goods would be shielded from the import tax until at least December, potentially keeping costs on these products down during the holiday shopping season.
The announcement moved stocks sharply higher. The Dow Jones industrial average climbed close to 500 points, or nearly 2 percent, on the news. The stock prices of Apple, Best Buy, Mattel and Macy’s were among those that rallied on the announcement. [WaPo]
For a President who’s repeatedly accused his predecessors of mendacious politicking, he sure seems to be trying to beat them in this category. He discovers that trade wars are not easy to win and refuses to take his medicine – instead, giving good cheer to the Chinese.
Alas and alack, however, today also saw a big slide in the major market indexes as we achieved – perhaps an improper adjective – an inverted bond yield curve:
The bond market is flashing a big neon caution sign.
Yields on 10-year US Treasury bonds dipped below the yield on the US 2-year bond Wednesday. It was the first time the 10-year yield was below the 2-year yield since 2007 — just before the Great Recession. Both were hovering around 1.58% as of late Wednesday afternoon.
In another worrisome sign, the yield on the 30-Year US Treasury fell to a record low Wednesday of about 2.01%.
This is significant. When shorter-term rates are higher than longer-term bond yields, that is known as an inverted yield curve. The 3-month US Treasury already inverted versus the 10-year this spring. Yield curve inversions have often preceded recessions and are a sign of just how nervous investors are about the immediate outlook for the economy. They are demanding higher rates for short-term loans, which is not normal. [CNN/Business]
An interesting contrast to a recent WaPo article on the evangelicals, who cite the roaring economy as a subsidiary reason to vote for Trump. It would appear that investors have their doubts about Trump’s ability to keep the economy going. His tendency to stir pots without trepidation – a seldom used herb these days – can leave one with an unnecessarily upset stomach when you least expect it.
