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Risk remains on the defensive in European morning trading

Stocks hold lower on the day while bonds firmer as market participants feel anxious over US-China tensions. All eyes are on US House Speaker Nancy Pelosi’s visit to Taiwan with the jet supposed to carry her delegation is apparently on its way to Taipei now.

China has warned of possible military action in response, but I think markets will breathe a small sigh of relief just to know that Pelosi has arrived safely. I mean there are rumors of flight safety issues and while it’s not a nice thing to say out loud, it’s surely on people’s minds just in case.

That said, expect China to retaliate in some other form or manner to this event. The magnitude of this response will set the tone for the markets in the sessions ahead. I mean the trade would be buy value, sell hysteria that is to say vanish the fear but we will see.

European indices are mostly down 0.4% to 0.7% currently with S&P 500 futures down 27 points, or 0.7%, on the day. Elsewhere, Treasury yields still look heavy, with 10-year yields continuing their recent downside technical break:


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