American and Chinese officials are returning to the negotiating table this week in Washington, D.C., but investors are pessimistic about their chances of reaching a deal.
Investors are awaiting potential retaliation from Beijing.
Stocks closed lower on Monday, following a rather uneventful trading day. It was the market’s first down day in three sessions.
The 10-year Treasury yield is lower at 1.5391%, as the demand for safe-haven bonds is on the rise thanks to the trade uncertainty. Yields and prices move opposite one another.
This uncertainty is weighing on business sentiment.
The NFIB small business survey showed optimism fell for a second straight month in September, though it remains relatively high on the whole. The uncertainty index in the survey also rose.
In economic data, the producer price index for September slipped to 1.4% year-over-year, compared with 1.8% expected. Stripping out the volatile food and energy component, the core PPI fell to 2% year-over-year, versus 2.3% expected. That inflation rate is roughly in the target range for the Federal Reserve.
“The decline in core producer prices in September was driven mainly by the volatile trade, trasnport and warehousing services components, but the big picture is that domestically-generated inflationary pressures remain fairly subdued,” wrote Andrew Hunter, senior US economitst at Capital Economics.
All this comes ahead of the consumer price inflation read on Thursday, which is expected to come in at 1.8%, according to economists polled by Refinitiv.