Market Brief USChina Trade Talk Snag Overshadows Powells Testimony

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• In his semiannual Humphrey-Hawkins testimony to Congress, Fed Chairman Powell did not tread any new ground, reiterating his view that monetary policy is appropriate and the US economy is doing well.
• Separately, the first phase of public hearings around President Trump’s impeachment began. Prediction markets are pricing in about a 75% chance that the president will be impeached (though not necessarily removed from office), but the market impact so far has been limited.
• Reports from Dow Jones indicate that US-China trade talks have hit a “snag” over the exact amount of agricultural purchases, leading to a midday swoon in risk appetite.
• FX: The New Zealand dollar remained the strongest major currency on the day after the RBNZ surprised traders by refusing to cut interest rates in the Asian session. The loonie was the weakest major currency, despite today’s rise in correlated oil prices.
• US data: US CPI came in stronger than expected at +0.4% m/m vs. +0.3% eyed, though the more important Core CPI reading merely met expectations at +0.2% m/m.  
• Commodities: Gold and oil both rose nearly 1% on the day, with the latter benefitting from the EIA’s decision to cut global oil demand forecasts by 90k bpd.

• US indices closed generally in positive territory after shrugging off the midday trade talk snag.
• Utilities (XLU) were the strongest sector today, gaining nearly 2%, while Financials (XLF) were the weakest.
• Stocks on the move:
  • 2019 standout stock Advanced Micro Devices (AMD) gained another 2% after announcing that Chinese giant Tencent would use its chips in servers.
  • Walt Disney (DIS) surged 7% after announcing that its newly-launched Disney+ streaming service has already surpassed 10M subscribers.
  • Marijuana company Tilray (TLRY) slipped -3% after reporting a -$0.50 loss per share, though the firm did beat revenue expectations. Two more major marijuana firms report earnings on Thursday – see our preview here.