The trade deal waiting game continues, oil markets are on edge amid clashes in Libya, and China expands its gold reserves. Here’s what’s moving markets.
Trade Deal Closer
President Trump’s top economic adviser, Larry Kudlow, told CBS on Sunday that the U.S. and China are “closer and closer” to a trade deal, and that top-tier officials would be talking again this week via “a lot of teleconferencing.” China’s state-run Xinhua news agency earlier reported that progress was made during talks in Washington that ended Friday, though “the remaining issues are all hard nuts to crack.” The White House released a statement Friday evening saying that “significant work remains, and the principals, deputy ministers, and delegation members will be in continuous contact to resolve outstanding issues.”
Libya Has Oil Markets on Edge
Libya’s internationally-recognized government said it would start a counterattack to clear the OPEC member of forces loyal to strongman Khalifa Haftar, escalating a standoff that has the potential to rattle global oil markets. At least 35 people have been killed since the middle of last week when clashes broke out near the capital, Tripoli. Strongman Haftar’s self-styled Libyan National Army continued its push to enter the capital Sunday, ignoring a United Nations plea to end the fighting that could spark a civil war in the North African country. Oil output has surged in recent months as a fragile peace took hold, but the latest battles are a reminder that reliable crude flows can’t resume without a political solution to eight years of strife.
Market Open
Asian equity futures are higher on Monday morning after U.S. stocks ended last week up on a strong jobs report and President Donald Trump's call for the Federal Reserve to cut rates. Treasuries rose Friday, with 10-year yields down two basis points. Oil jumped and gold was little changed. The Australian and New Zealand dollars, and the yen were all basically flat. Ahead this week, apart from waiting for a trade deal, European Union leaders meet to decide what to do about the U.K. as the Brexit impasse grinds on. Prices paid by U.S. households for goods and services probably rose in March as Fed Chairman Jerome Powell called low inflation a major challenge. Markets await minutes from the Fed’s March rate meeting and the European Central Bank’s monetary-policy decision. India holds general elections with voting in seven phases and results released on May 23. The World Bank Group and the IMF hold their Spring Meetings amid precarious global growth.
China’s Gold Rush
China expanded its gold reserves for the fourth straight month, adding to optimism that central banks globally will continue to build holdings. The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website. In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December. The latest data indicate that the world’s top producer and consumer has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Meanwhile, its foreign-currency holdings rose for a fifth month as lower government bond yields in developed markets lifted valuations.
Indonesia's Presidential Race Heats Up
Indonesian presidential candidate Prabowo Subianto called for change in a rally Sunday, talking down the government’s economic performance as competition heats up ahead of an election next week. Indonesia goes to the polls on April 17 in a contest that pits the incumbent Joko Widodo against the contender with the economy being the focal point in the race. The latest polls have Widodo on track to win, though Prabowo has closed the gap in recent weeks. Southeast Asia’s biggest economy has been growing at about 5 percent, below the 7 percent targeted by Jokowi when he came to office in 2014. Meanwhile, inflation eased to 2.48 percent last month, the slowest pace of price growth since 2009. election next week
What We’ve Been Reading
This is what’s caught our eye over the weekend.
And finally, here's what David's interested in this morning
The small property agency office right beside my apartment building here in Hong Kong recently put up an advert for a parking space selling for about US$400,000. That ridiculous piece of information is helping me squeeze one last note out of the China bond inclusion story before other things take over the financial news cycle: Buy Hong Kong property (or if you're not part of the world's 1 percent, buy property stocks). BNP Paribas Head of Asia Credit Strategy Charles Chang thinks Hong Kong real estate ends up benefiting, essentially because foreign institutional investors will need to build up and maintain the bulk of their teams in Hong Kong instead of on the mainland. 
If you think he has a point but don't have enough for a deposit just yet, there's time to save up. Just remember, the initial phase of folding about 350 debt securities into the Bloomberg Barclay's Global Aggregate Index will take about 20 months. (The index is owned by Bloomberg LP, the parent company of Bloomberg News.) That's just the first group for just one set of global benchmarks. We haven't even started talking about other groups, let alone the active money that will eventually be playing this market. Deutsche Bank sees about a fifth of Chinese government debt eventually being in the hands of foreign investors.
You can follow Bloomberg TV anchor David Ingles on Twitter at @DavidInglesTV.
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