Indeed a road full of twist and turn
With the market in dire need of a glimmer of hope, China Vice Premier Liu: Spoke with US Treasury Sec Mnuchin and Trade Rep Lighthizer; discussed how to implement the consensus reached by two leaders, pushing forward timetable, a roadmap for next stages of trade talks.
Sentiment has perked up across a wide berth of asset classes as we’ve been waiting for a defined blueprint for trade truce to shake markets out of its current funk.
But let’s take a breath here!!
Remember this isn’t the first time these backroom negotiations have tangled a carrot in front of the markets. And while I view this development as a positively significant in the broader context, a trade war is far from over, and these are little more than a preliminary step in what should be a long and winding road fraught with peril. And frankly, the market will need more than a verbal agreement to agree, we need an unwavering written in stone agreement to put this mess behind us. Until that point, a bullish pivot remains highly unlikely.
The headline has sparked an intraday short covering rally in oil and commodities markets while the USDCNH has fallen 100 pips as China risk abates somewhat.