North Korea has responded to the toughest, if watered down, United Nations Security Council sanctions ever imposed against the isolated country with its most strident rhetoric yet.
For the first day in three S&P futures have pulled back modestly from record levels as some investors cautioned that gains had gone too far, too fast, European shares are mixed while Asian equities extended their longest rising streak in almost two months as continued gains in Japan and India offset the losses in Hong Kong. The dollar ended a two-day advance as TSY yields dropped in what has become a close correlation trade (see below) while oil and gold rose, perhaps in response to the ongoing plunge in bitcoin.
In an unexpectedly strong diplomatic escalation, one day after China agreed to vote alongside the US (and Russia) during Monday's United National Security Council vote in passing the watered down North Korea sanctions, the US warned that if China were to violate or fail to comply with the newly imposed sanctions against Kim's regime, it could cut off Beijing’s access to both the US financial system as well as the "international dollar system."
You've probably heard this one before.
Following an uneventful weekend, ahead of which markets were on edge over another probable North Korean ICBM launch, the futures have breathed a sigh of relief, with the USDJPY and dollar jumping, while gold has tumbled by $10 from Friday's highs.