The G20 summit saw progress, albeit limited, on the trade front with China. Both the U.S. and China expressed willingness to deescalate the trade war and try to find common ground for a deal with fresh negotiations. This development comes at the same time that the Organization of the Petroleum Exporting Countries (OPEC) agreed to extend production cuts, sending oil above $60/barrel.
The positive trade news and rising oil prices kick off an important week of U.S. economic data, beginning with readings on manufacturing activity. I expect a slowdown versus prior months, but more strength than similar European indicators have demonstrated. The short holiday trading week is capped off with June employment data, and I anticipate solid numbers on the jobs front. In this environment of positive trade news and soft economic data, the prospect of a Federal Reserve rate cut will keep risk assets well bid.
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