Futures Soar, Yields Jump After China, US Agree To Resume Trade Talks In October

S&P futures surged and 10Y yields jumped after China's CCTV reported that its top trade negotiators will travel to Washington in early October for talks with U.S. counterparts, to resume trade war negotiations. The decision came after an early Thursday phone call Beijing time between Chinese Vice-Premier Liu He and the USTR Robert Lighthizer and Treasury Secretary Steven Mnuchin, according to a statement from China’s commerce ministry.

Other Chinese officials, including Commerce Minister Zhong Shan, central bank governor Yi Gang and Ning Jizhe, the deputy head of the National Development and Reform Commission, also joined the phone call, CCTV reported.

In the lead up to the talks, lower-level officials will have "serious" discussions this month to prepare for the talks, which incidentally were expected to begin in September.

However, for headline-scanning algos, October is even more bullish than September as equity futures went vertical on the news, spiked the Emini by 26 points to 2,965, just 2% away from all time highs, and the Dow was some 250 point higher.

Treasury yields spiked as well, with the 30Y US Treasury rising back over 2.00%

Meanwhile, the offshore Chinese yuan jumped as low as 7.12, its highest level since last week's sharp drop on the escalation in tariffs...

... while gold slumped even though the dollar barely budged on the news.

So is this just more posturing by both sides, when both Washington and Beijing know very well that a real deal is impossible? The answer is most likely yes, although the CCTV report said both sides agreed to make concrete efforts to create positive conditions to continue dialogue.

That said, prepare for more deja vu disappointment: after their previous phone call, Donald Trump said the two sides would meet in September. Instead, since then, both countries have increased tariffs on imports of each other’s products, and China has said it would not make concessions because of US pressure.