Daily Market Color August 2, 2022Taiwan Emerges as Latest Risk Potential Pelosi visit to Taiwan looms as latest risk. House Speaker Nancy Pelosi’s planned visit to Taiwan has reawakened markets to geopolitical risks. During a call last week with President Joe Biden, Chinese President Xi Jinping warned that “whoever plays with fire will get burned.” While the risk of actual military conflict is low, the visit still represents a significant shift in U.S. – China relations. Risk assets sold off sharply and Treasurys were the beneficiary of a risk-off bid, Treasury yields and swap rates again falling, this time by 5-10bps on the day ISM manufacturing and construction spending mixed. The ISM manufacturing report showed a slight expansion in manufacturing activity during the month of July, climbing to a 52.8 level vs. forecasts that had only called for a 52 reading (any reading above 50 indicates expansion. Construction spending meanwhile completely plummeted, falling 1.1% in the month of June. Day ahead. Tomorrow will bring the latest JOLTS job openings and job quits data. The Fed’s Charles Evans will also make public comments, some of the first since the Fed’s rate decision last week.