Geopolitical issues

The week is starting out on the quiet tip, but there is plenty in the days ahead to be keeping a watch out for. Geopolitical issues will continue to bubble below the surface for the capital markets. The fallout from the re-imposition of US sanctions on Iran has apparently helped lift oil prices in the face of the rising dollar, which often acts as a drag. Today or this week, the US will take the symbolic step of moving its embassy to Jerusalem. Meanwhile, the US reportedly is offering North Korea economic assistance in exchange for giving up its nuclear weapons, which seems very much like the deal with Iran from which it is withdrawing.

On Tuesday, China’s Vice Premier, and top economic adviser to President Xi, Liu He, will lead the delegation. It is his second trip in three months. China does not seem opposed in principle to some quantitative bilateral trade target. What is being negotiated is the size and the price. Also, China releases data including industrial production and retail sales figures Tuesday. The same day on Tuesday this week, U.K. Prime Minister Theresa May will meet with her Brexit cabinet to discuss plans for a post-withdrawal customs union.

And in commodities, gold continues to be driven by the US dollar and rates causing the markets to continue to consolidate at the low end of the year range due to the stronger USD. But with US yields testing the 3 % level in 10 Years UST, rates are also weighing on Gold sentiment, despite wobbly equity markets and the abundance of geopolitical headline risk.