Investors appeared somewhat less concerned about the political situation in Italy as trading began Wednesday.
While government bonds eased back, the precious metals saw a touch of safe-haven demand. Spot gold moved modestly higher, hovering at $1,300 per ounce.
The silver price also rose 9¢ (+0.5%) to $16.42/oz. Platinum ($905/oz) and palladium ($975/oz) were each unchanged.
European Markets Recover from Concern Over Italy
After a dramatic selloff yesterday, Italian bonds saw their strongest demand since December. Fears of upheaval over new elections in Italy eased from yesterday's fever pitch.
Most bonds were down across Europe, although the southern European countries (Italy, Greece, Portugal, Spain) saw their 10-year yields fall.
Equities rose about 0.1% around most of Europe. The DAX rallied 0.6% in Germany, but France's CAC 40 still traded 0.4% in the red.
Stocks sank in New York Tuesday but rebounded about 0.45% at this morning's opening bell.
The Dow Jones last closed 1.6% lower and the S&P 500 lost more than 1.15%, but the Nasdaq only dipped 0.5%.
However, U.S. markets were met with some relatively weak economic data Wednesday.
The latest estimate for first-quarter GDP was revised lower to 2.2%. This was despite the considerable boost that corporations got from last year's tax cuts.
Meanwhile, the ADP payrolls reported this morning by the Department of Labor also disappointed. May's numbers came in lower than anticipated, with 178,000 jobs added by the private sector. April's figure saw a sharp downward revision.
Treasurys took a breath from their biggest one-day rally in two years. The 10-year T-note yield eased back to 2.82% after touching as low as 2.77% yesterday. It was also the 10-year note's highest trading volume on record.
New Tariff Threats Could Portend Trade War
Beyond the situation in Europe, it seems that a trade war is "back on" between the U.S. and China.
The White House announced it would indeed pursue a suite of tariffs on Chinese imports amounting to $50 billion. Washington continues to pressure China to relent on allegedly stealing intellectual property from American companies.
Talks will continue between the two sides, perhaps with more urgency. Secretary of Commerce Wilbur Ross is scheduled to visit Beijing this week, joining a coterie of other high-ranking members of the administration.
Chinese officials (as well as the state media) predictably accused the U.S. of performing a surprising "about face" and refusing to meet halfway in the trade dispute.
Stocks in Asia tumbled more than 1.4% overnight. Elsewhere in the region, the supposedly canceled summit with North Korean leader Kim Jong-un may happen after all.
With a potential trade war back in focus, the dollar tumbled from its recent highs. The DXY index was down 0.45% to 94.4.
However, expectations of another rate hike from the Federal Reserve are cooling slightly given the USD's rally of late.
Forex markets responded accordingly. The pound sterling recovered 0.35% to $1.33 while the euro was up 0.65%, trading right at $1.16.
Oil prices staged a moderate recovery, but Brent crude (+1.3%) continues to outpace WTI crude (+0.7%). The widening gap between the two benchmarks is now approaching $10 per barrel.
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