Trump-Xi Ceasefire: Risks still locked and loaded - TDS

Analysts at TD Securities point out that the U.S. and China has agreed to suspend any further trade war intensification for the next 90 days, starting immediately thereby G20 summit avoiding the worst-case outcome.

Key Quotes

“The G20 summit placated other Trump-related trade risks by acknowledging support for WTO reform, though Trump reignited NAFTA termination risks by threatening to invoke Article 2205 shortly.”

“We see minor scope for a risk rally in the near-term, led by EM Asian FX and equity performance. USDCNY should move away from the 7.00 level, but the vague statement and substantial hurdles in negotiations in the coming 90 days should contain any sustained shift in risk sentiment.”