The U.K.’s Brexit Secretary David Davis announced late Sunday that he was resigning from his post, as he wasn’t prepared to be “a reluctant conscript” to Prime Minister Theresa May’s plans to leave the European Union (EU). May reached a Brexit compromise with her cabinet on Friday, persuading ministers to back her intention to press for “a free trade area for goods” with the EU.
British foreign minister Boris Johnson resigned later on Monday, the second high-profile departure from the pro-Brexit coalition.
The compromise appeared to give global markets a lift Monday as some on Wall Street viewed the U.K.'s decision as softer than expected, tempering lingering fears about a trade war between the United States and fellow economic powerhouse China.
The U.S. placed $34 billion of tariffs on Chinese goods on Friday, a move that triggered China to hit back with its own set of duties.
Washington's 25 percent duties affect products such as water boilers, X-ray machine components, airplane tires and various other industrial parts. China immediately responded with $34 billion in tariffs on U.S. goods, including soybeans, pork and electric vehicles. Beijing called it the "biggest trade war in economic history."
"I think the market has been in a trade-off over the past few weeks between strong economic data and trade worries," said Arthur Bass, managing director of fixed-income financing, futures and rates at Wedbush Securities. "What’s really been boosting the Treasury market is this whole fear of trade sanctions. We all studied the Smoot-Hawley tariffs in Econ 101 and the market has been feeling a little bit of uncertainty."
"While the economy is strong here is the U.S., it’s not as strong in Europe," he added, referencing the latest employment report from the Department of Labor.
Markets have been given a boost following the publication Friday of the latest jobs report, which revealed that the U.S. economy added 213,000 jobs in June, beating expectations. Along with June's upside surprise, the Bureau of Labor Statistics revised April's jobs numbers up to 175,000 from 159,000 and May's to 244,000 from 223,000, a total of 37,000 more than initially stated.
Though the unemployment rate ticked higher to 4 percent, the rise was likely due to a rise in the labor force participation rate, which increased 0.2 percentage points to 62.9 percent as 601,000 people re-joined the labor force.
On Monday, consumer credit data is due out at 3 p.m. ET.
In central banking news, Minneapolis Fed President Neel Kashkari is expected to appear at the two-day Homeownership in Indian Country: Creating the Opportunity for Choice conference in Prior Lake, Minnesota.