China growth stabilizes, U.S. to sell 20-year bonds, and the EU to examine trade deal. Good newsThere were signs a firmer recovery could be underway in China after GDP data released overnight showed growth stabilized at 6% in the final quarter of 2019 from a year earlier. Data also showed investment in the economy picked up for the first time since June, while retail sales rose 8%. The fourth-quarter number put the annual expansion at 6.1%, in line with the government's target. The positive numbers, coupled with increasing optimism after the signing of the phase-one trade agreement adds to a growing view that the world's second largest economy will successfully avoid a major slowdown. Paying the billThe U.S. Treasury will issue 20-year bonds in the first half of this year as it expands its roster to fund the country's ballooning deficit. With current 30-year Treasuries that have 20 years to maturity yielding about 2.15%, the new debt will offer sizable premiums over comparable German and Japanese notes. The revival of the 20-year bond, abandoned in 1986, comes after the U.S. looked at other options, including a 50- and 100-year issuance, in consultation with dealers. Deal threatEU Trade Commissioner Phil Hogan said his team will examine the U.S.-China deal to see if it is compatible with World Trade Organization rules, saying they would take a case to the WTO if there is an issue. Hogan, on a three-day visit to Washington, pulled no punches in his criticism of current U.S. policy, saying President Donald Trump is misguidedly "obsessed" with a U.S. deficit in goods traded with the EU. He pointed out that once services are included, transatlantic trade is balanced. Markets riseThe positive numbers from China are helping lift global equities. Overnight the MSCI Asia Pacific Index gained 0.4% while Japan's Topix index closed 0.4% higher. In Europe, the Stoxx 600 Index had risen 0.8% by 5:50 a.m. Eastern Time with every industry sector gaining. S&P 500 futures pointed to more record highs at the open, the 10-year Treasury yield was at 1.818% and gold was higher. Coming up…December U.S. housing starts are expected to show a small increase when the number is released at 8:30 a.m. as the sector continues to improve. Industrial production is forecast to show a small decline at 9:15 a.m., while there is little change expected in University of Michigan consumer sentiment at 10:00 a.m. Philadelphia Fed President Patrick Harker and Fed Vice Chairman for Supervision Randal Quarles are today's Fed speakers. Among the companies reporting earnings today are Schlumberger Ltd. and State Street Corp. What we've been readingThis is what's caught our eye over the last 24 hours. And finally, here's what Luke's interested in this morningDallas Fed chief Robert Kaplan doesn't want the Fed's balance sheet to grow too much because he's worried it's contributing to "elevated risk-asset valuations." These remarks from an interview came a day after the New York Fed announced a modest trim to its future repurchase operations. Kaplan referred to the Fed's Treasury purchases as a "derivative of QE," a remark that clashes with Powell's description of its bill-buying as not quantitative easing. As previously observed, this is quantitative normaling, not QE: the Fed's actions are designed to ensure the proper transmission of the current stance of monetary policy, not ease conditions above and beyond that. As for Kaplan's concerns about valuations, it's worth noting that financial conditions have done precisely what the Fed should have expected them to do in light of its rate reductions. The chart below shows the amount of easing implied by the annual change in Goldman Sachs's U.S. financial conditions index almost perfectly matches the move in the federal funds rate over the past 12 months.  Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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