Pre-market:
News that the U.S. and China are in “90%” agreement on the terms of a draft trade deal has futures rallying notably this morning. Global services PMIs coming in virtually across the board good is no doubt helping along what has been a broad overnight global rally.

The two data points released in the U.S. so far this morning paint a bit of a mixed picture. Mortgage applications last week exploded higher by nearly 19%, although the bulk of the increase came from refinances (purchases were up 3%) as mortgage rates continue to decline. Offsetting a bit of that good news was ADP’s Employment Report that estimates a 129k increase in March’s private payroll growth, versus a consensus estimate of 165k and a February read of 183k.

The extent to which this morning’s rally is about US/China trade talks makes it a bit precarious. I haven’t heard anything that suggests that the U.S. is willing to give up on its existing tariff scheme. Indeed, a deal could emerge that leaves tariffs in place while arresting any escalation from here, but that would virtually have to be a disappointment for markets.

Brexit, while not yet dominating today’s headlines, is looking a bit messy as I type. This morning Juncker (European Commission President) suggested that a no-deal Brexit next week is growing more likely and he made no mention of an extended delay. A lot still to come out of the UK parliament this week that could, at a minimum, provoke intraday market moves.

Conditions, technical and fundamental, remain supportive of more upside from here, but headline risk remains – to say the least – elevated.