There isn't a lot of conviction in the early going, which is understandable as the Fourth of July holiday beckons and the post G-20 enthusiasm lessens. The S&P futures are down two points and are trading 0.1% below fair value. The Nasdaq 100 futures and Dow Jones Industrial Average futures are also little changed and pointing to modest declines.
The stock market did okay on Monday, yet the steady fade from opening highs and a series of soft manufacturing PMI reports from around the globe tempered some of the excitement, as did the eventual understanding that there is still a lot of uncertainty surrounding the ultimate outcome of trade negotiations with China.
President Trump noted after the close on Monday that trade talks with China have already resumed, but added that he doesn't think the U.S. can accept a 50-50 deal with China.
China has said previously it wants a "balanced" deal, so one can see the difficulty that may exist in striking a compromise. In any event, that is one factor that has taken away from the initial G-20 takeaway that proved to be overdone.
The latter point notwithstanding, the S&P 500 still managed to log a new record close on Monday, which was a nice milestone to begin the second half year. In the same vein, with the move into July, the U.S. economy also logged its longest expansion in history -- also a nice milestone to begin the second half of the year.
These milestones, however, have invited some related angst that perhaps the stock market has moved too far, too fast (it's up 18.2% year-to-date), and that the economy is in a late-cycle stage.
That angst can lead to some choppy, if not volatile, trading behavior, particularly in a holiday-shortened week like this one when the trading ranks tend to be preoccupied with other pursuits.
The U.S. Trade Representative, however, is preoccupied with competition concerns and has proposed for review additional tariffs on $4 billion of imported EU goods as a countermeasure of sorts for the government subsidies that Airbus receives.
That's not a big number, yet the proposal is big in the sense that it reminds market participants that trade/tariff uncertainty isn't limited only to the China negotiations.
Strikingly, there is some defensive positioning taking root in the Treasury market in the early going, perhaps owed to the uncertainty involving trade matters and/or perhaps owed to "parking things" safely ahead of the Fourth of July holiday. The 10-yr note yield is down three basis points to 2.00%.
Macro matters appear to be driving things this morning, as there isn't any corporate news of note that is market moving. Even so, the macro matters are only contributing to micro moves for the broader market, which seems to be shifting into holiday mode.