Markets are mixed with clear drivers lacking. S&P 500 rebounded marginally on positive trade news. Yet Asian trading has been more
tentative. Thursday Chinas top diplomat stated that China was willing to purchase additional US products and trade discussion would
yields results. However, news that profits of Chinese major industrial firms fell a worrying -2.0% m/m (following 2.6% rise in July). The
follow-through into equities are slight but set a pessimistic tone. USD continued to dominate FX trading despite US yields softer. Over the
weekend Hong Kong is bracing for amplification of pro-democracy protests ahead of the 70th anniversary of the founding of the People
Republic on Tuesday. Despite the healthy fundamentals, Hang Seng continued to be sold on risk concerns. We would tread carefully around HKD
and Hong Kong assets given the growing event risks. On the docket, in the US Core durable goods will further come under pressure as a clear
downward trend is set to begin. US core PCE deflation will likely test 2.0% y/y in 4Q which could limit the fed's ability to adjust monetary
policy. In Mexico, following the clear trend in EM central banks, Banxico is expected to cut the Main Rate 25bp to 7.75% while maintaining the
dovish tone.
By Peter Rosenstreich
