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Disputes.

Monday was predictable.

Monday was predictable.

Risk assets rallied after Steve Mnuchin’s Sunday comments about “putting the trade war on hold“, although hilariously, he showed up on CNBC to “clarify” that it was never in fact a “war” but rather a mere “dispute”:

I guess that’s Steve, although given how stiff and mechanical he is on TV, one often wonders whether they’ve hired one of those Chuck E. Cheese Animatrons out of retirement and dressed it up in a suit to double for Mnuchin in interviews.

mncuhin

The equity rally began overnight in Hong Kong and the risk-on sentiment was alive and well in the U.K., where the FTSE hit another all-time high.

FTSE

Best day for the Dow since May 4:

Dow

But things aren’t well in Italy. Market angst around the prospect of a parallel currency sent 2-year yields sharply higher and notably, the BTP-bund spread exploded wider:

BTPBund

Volumes picked up amid comments from Fitch which is following in the footsteps of DBRS, noting that the populist “plan” has the potential to “significantly increase” the government deficit.

Still, that was hardly enough to rattle other markets on a day when the trade “dispute” (don’t call it a “war”) was “resolved”. Havens were pressured across the board, with the yen and gold both falling, although the moves came off a bit later:

YenGold

The dollar was up initially, but gave it all back as EM currencies found some respite from the risk-on sentiment:

DXY

10Y USTs chopped around, plying a narrow range – a bit of flattening in the curve. Here’s 10Y yields going back to the retail sales spike just for reference:

UST

The Turkish lira is in a death spiral – you can read the latest on that rather unfortunate story here, but suffice to say this: new all-time lows. Big picture shows the extent of the bloodbath:

USDTRY

Oil was higher, coming off a third week of gains for WTI and a sixth consecutive week of gains for Brent. Venezuela’s “election” raises the prospect of further supply issues. Trump signed an executive order restricting the Maduro regime’s ability to sell assets. Specifically, it blocks all transactions related to the purchase of debt owed to Venezuela and halts some equity transactions as well.

WTI

Finally, for your moment of zen, here is Trump explaining how rednecks who are fascinated with cars going around in circles at 200mph are similarly enamored with the national anthem…

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