14 to 20 October: Never a dull moment

Although the number of relevant macroeconomic data releases was limited, the week was busy with policy announcements and political developments. First and foremost, the trade saga continued during the week as the US and China made ‘substantial progress’ for a ‘phase one’ agreement, according to Chinese Vice Premier Liu He. Should the talks remain on track, there is a chance to sign an interim deal in mid-November. Second, the impeachment inquiry against the POTUS remained in the limelight. As the inquiry progresses, the degree of uncertainty increases in terms of the US administration’s approach to economic, foreign and trade policies. Third, a vote on Brexit was – unexpectedly – postponed by Parliament. As long as the probability of a hard Brexit remains greater the zero, investor sentiment and economic confidence can remain frail for a prolonged period of time. Only one thing is certain: each of these will be closely scrutinised by investors in the coming weeks, as their impact on economic developments could be meaningful and could amplify the slowdown in global economic activity. Consequently, it will be key to see if central banks and finance ministers take the International Monetary Fund’s advice and undertake measures to mitigate the downside risks to the slowing global economy.

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