Update (1030ET): The much-watched account of Hu Xijin, Editor-in-chief of the Global Times, tweeted a warning managing expectations about the enthusiasm over a Trump-Xi meeting... "President Xi Jinping did agree to meet with US President Donald Trump at G20 and they will discuss fundamental issues in China-US relations. This phone call brings a slim hope to break the current deadlock between the two countries"
However, within seconds, the tweet was deleted.
Meanwhile, Yuan has extended gains.
* * *
The bears are suffering a terrible trifecta today.
First, Draghi threw in the towel said he would be cutting rates soon; second, Powell is expected to unleash the dovish floodgates tomorrow; Third and final, moments ago, Trump restored hope that a trade deal may be forthcoming at next week's G-20 when he tweeted that contrary to conventional expectations, he will in fact be having an "extended meeting" with Xi next week..
Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.— Donald J. Trump (@realDonaldTrump) June 18, 2019
The news sent USDJPY surging, offsetting the earlier quake-related frop.
... the Dow soaring more than 300 points...
... the Chinese yuan spiking...
... and the S&P500 once again just shy of all time highs.
So what does this mean for the Fed: with the ECB providing a dovish tailwind to US equities, with a glimmer of hope now appearing that trade war may be ending, and with the S&P at all time highs, Powell's job just got even more difficult: how can the Fed justify a preview to a rate cut tomorrow? We'll find out in just over 24 hours.