Black Monday Postponed?

Apparently, markets are willing to give Steve Mnuchin the benefit of the doubt on Monday morning.

“We’re having very productive conversations with [China],” the Treasury Secretary told Fox News on Sunday, adding that he’s “cautiously hopeful” on striking a deal with Beijing that averts disaster.

Of course he also said Trump isn’t “afraid of a trade war” and reiterated that the U.S. would go ahead with the tariffs “unless we have an acceptable agreement that the president signs off on.” So I’m not at all sure his comments should be viewed as conciliatory on net.

Still, between that and the deal with South Korea (which will apparently dodge the tariffs after agreeing to a quota for steel exports to the U.S. that’s roughly 70% of the 2015-2017 sales average), global markets are feeling a bit better. Futures are nicely higher:

Additionally, it’s worth noting that according to the Wall Street Journal, China and the U.S. are working behind the scenes to “improve U.S. access to Chinese markets.” To wit:

The talks, which cover wide areas including financial services and manufacturing, are being led by Liu He, China’s economic czar in Beijing, and U.S. Treasury Secretary Steven Mnuchin and U.S. trade representative Robert Lighthizer in Washington.

In a letter Messrs. Mnuchin and Lighthizer sent to Mr. Liu late last week, the Trump administration set out specific requests that include a reduction of Chinese tariffs on U.S. automobiles, more Chinese purchases of U.S. semiconductors and greater access to China’s financial sector by American companies, the people said. Mr. Mnuchin is weighing a trip to Beijing to pursue the negotiations, one of these people said.

Meanwhile, the Chinese delegation to the WTO had harsh words for the Trump Administration, calling the latest tariffs “purely unilateral” and declaring the measures in violation of WTO rules.

“[America] is setting a very bad precedent by bluntly breaching its commitment made to the world,” Chinese WTO Ambassador Zhang Xiangchen says, adding that “the WTO is under siege and all of us should lock arms to defend it.” All of that according to a copy of Zhang’s remarks at a March 26 WTO meeting in Geneva.

So it’s not all kisses and hugs.

Notably, USDJPY did manage to limp higher overnight, which is good news for risk sentiment because it was starting to look like we might hit an air pocket of sorts on the way to God only knows where for the pair, potentially putting Japan in a position of having to weigh overt intervention.

As Bloomberg puts it, it looks like Black Monday is “deferred” for now.

And I guess that’s only right. After all, there would be something rather tasteless about having Black Monday in the same week as Good Friday.

*********