20 to 26 May: The spat goes on: “It is not me, it is you”

The US and China were pointing fingers at each other last week claiming that their partner acted unreasonably and hindered making progress in the negotiations. On Monday, US President Trump came out with a statement citing that he and his administration were not ready to make a deal with China, threatened that tariffs can go up ‘could go up very, very substantially, very easily’ and added that eventually there would be a trade deal in the future. In a nutshell, there is really nothing new here that could meaningfully impact macroeconomic fundamentals. We remain of the view that global investor sentiment will swing according to the headlines related to the trade negotiations. For the time being, investors should find comfort in the fact that Chinese authorities publicly – including the PBOC – claimed that any disruptions to the renminbi market will be prevented to keep the market stable, and that the Fed remains patient.

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