While markets were very quiet and uninspiring on the surface, interesting things did in fact happen in the week that was dominated by the signing of the Phase 1 US-China trade deal on Wednesday. Though US Treasury yields were flattish for the week, USD OIS continue to price in a 25bps cut as the Fed’s next move. The market’s conviction on a cut was strengthened by reports that President Trump will try again to pack the board of Governors with doves, nominating Christopher Waller of the St. Louis Fed and economist and goldbug turned dove Judy Shelton to the Board. Furthermore, the White House is also floating trial balloons of a fiscal stimulus this year, which would worsen the federal government budget position even further.


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