As if the US and China didn’t have enough disagreements, the US Congress is condemning China’s handing of the Hong Kong protests and that has escalated tensions once again. The impact in the financial markets is a general shift of investor funds into the safety of US Treasuries; causing the 10 year bond yields to fall and, oddly, we have also seen the US Dollar weaken a tad. At the interbank level, Sterling is pushing above USD 1.29 again and the Euro is half a cent higher; just below USD 1.11.
The data diary for the US is light this week, in the run up to the Thanksgiving holiday, but some key announcements include Tuesday’s home construction figures and the Jobless Claims report due on Thursday. Housing starts showed a drop for September, which was hoped to be a temporary blip, so those keeping a close eye on the US markets will have been relieved to see a significant rebound this time around, with building permits up to the highest level since 2007.