PARDON ME!

That appears to be what Trump is doing and feels that he can pardon himself should the Mueller investigation heat up. Incidentally, Nixon tried that ruse and was firmly told by the Attorney General that he could not.

Maybe Trump was alluding to the fact that he may have broken some law by tweeting out economic data via @POTUS when the correct channels for data release had not been utilised. It’s all a little strange.

Policy decisions are being made via Twitter.  And people are being pardoned via Twitter.  And economic data is being released ahead of time via Twitter. But one piece of data that was not released by Twitter was the data relating to new orders released today.

So, new orders fell, weighed down by falling orders for transportation equipment and machinery. Orders for machinery fell 0.7% and transportation fell 6%. Current orders are being buoyed by the global economy and the domestic economy. Hence, factory orders advanced 8.3% YoY to April.  A stalling of domestic growth or global growth would see factory orders tumble. Capital goods shipments fell 0.7%.

Global growth is dependent upon trade.  And Trump, through his Twitter account, appears to be jostling his position on trade according to his mood and want. For now, the U.S. allies are somewhat bemused. And China is confused as to what it is that the Trump Administration wants. At some point, a breaking point will be reached and that may be a tweet too far.

Markets are now becoming comfortably numbed by the noise of Trump’s Twitter account except for when it comes to early indications surrounding important economic number releases. Hence, traders watch @POTUS but have given up on trade talks because the mood swings change the outlook daily.

Elsewhere, traders are starting to become concerned about looming inflation. In Germany, there is concern that the spread between inflation and 10-year bunds is near the widest for 60 years. German core inflation is running at 2.2% whilst the bund is trading at 0.42%. The widest point was in February 2017 at 195 bp and last week it was 186 bp.

Other factors affecting European markets have been the various political problems. Now that both Italy and Spain have appeared to put their issues behind, the European bond markets settled into a little bout of selling. Maybe this will all slow should Trump’s tariffs come into existence and threaten growth.

There is some discussion about European purchases of U.S. treasuries slowing and the impact this will have on U.S. Treasuries. The Europeans accounted for 46% of cross-border purchases and other developed markets contributed 14%.

With greater supply and a looming large deficit, the U.S. no longer looks attractive for investments. A rotation out of U.S. would then be beneficial for the euro. To quantify the numbers, European purchase of U.S. Treasuries were $500 bio annually whilst domestic purchases accounted for $200 bio (Reuters). The ECB has played a major role in reducing volatility and interest rates for U.S. investors.

Equity markets loved the day and continued to rally on the back of Friday’s jobs report. Technology stocks saw the biggest gains on the day with the S&P Technology Index up 0.8%.

Elsewhere, Finance Ministers ranted and vented at the G7 or rather the G6 +1 trade party.

Recap.

Equities: The S&P 500 rose 0.5% and the Dow rose 0.72% while the Stoxx rose 0.5%.

Currencies: The Bloomberg Dollar Index fell 0.1% while the euro gained 0.3% and the yen fell 0.3%

Bonds: The ten-year closed around at 2.94% while the 2-year closed at 2.52% and the 30-year closed at 3.085%. The ten-year bund closed at 0.422% and the UK gilt closed at 1.30% while the OAT closed at 0.733%.

The U.S. curve closed the day with the following closes 2/10 at 42.2 bp and 2/30 at 56.5 bp and the 10/30 closed at 14.1 bp. The U.S. 5-year closed at 2.796%.

Commodities: WTI fell 1.4% and gold fell 0.1% while copper rose 1.27%.

Bitcoin is trading around $7536.

Aussie Market Today.

Expect a rally in equities and a selloff in bonds. Trade and geopolitical risks will set the market trends.  And at this stage, it appears to be a lottery.

Markets are but a tweet away from action should Trump advise the world of his new tariff policies.