US Stocks fell initially after the announcement of a fresh round of US tariffs against China but then crawled back into positive territory, as the path of least resistance remained up in absence of follow through selling. The S&P500 gained +0.5% and the Nasdaq +0.9% gain despite China saying that it would retaliate to additional tariffs (D. Trump then said China wants to influence the political elections with retaliation…). Stocks did rally one more time but this was not the most salient event of the day which we thought was the good tenure of EM markets in general and a broadening sell off in bond markets. EM stocks generally outperformed which was noteworthy on a day of steep escalation on the trade war front. Even China recovered the previous day’s 2% loss and Russia rallied strongly as well. Japan witnessed a powerful rally as well gaining 2.9%, trading 3.6STD above its 20dma, supported by a weaker yen. In other words, there was “no America first trade” yesterday and our impression is that the momentum behind this overcrowded theme is fading fast (because whatever happened previously, the consequences of the trade war will not be all benefits to the US economy for reasons outlined in this article (JPM is selling US equities and adding to EM) and in our previous briefing. The US stock market performance was therefore also “below average”, in particular as it was accompanied by mixed performance among some of the key tech names (Tesla dropped 3.5% as it now faces a US criminal probe over Elon Musk Statements). Bund yields rose while Italian bonds continued to outperform. The dollar performance was contrasted and volatile but in the end it closed mostly lower against EM (USDRUB USDCNH USDZAR) and Ocean currencies (USDCAD USDMXN ) with the exception of INR and TYR. GOLD ended mostly unchanged with platinum performing best among precious metals, rallying +1.7% as it was propelled near the top of our Z-score report in breakout mode (trading +2.9STD above its 20dMa). Platinum became the first precious metal to break its 50dma to return to a positive short-term trend. Bond weakness was perhaps the most salient event yesterday with 10-year yield adding 7bps to 3.06% while the entire bond complex traded heavily, closing 2.5 std below its 20dma in most cases. 

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