Weekly Market Recap
Week in review
- 24/12 – U.S. – Durable goods orders, S&P/Shiller house prices
- 27/12 – JP – Unemployment, industrial production, retail sales
Thought of the week
The U.S. and Chinese governments gave markets an early Christmas present when they agreed to a partial trade deal. This ‘Phase One’ deal entails the U.S. suspending the next round of tariffs and cutting the tariff rate on the September 1 tranche of imports in half, in exchange for China committing to purchasing USD 50billion of U.S. agricultural products annually, among other changes. Few details on these matters have emerged beyond the high level overview the U.S. side has shared. As we have long highlighted, the U.S.-China trade war extends far beyond the tariff rate on imports from the other, but this ‘Phase One’ deal is encouraging as it represents some progress on issues. Many outstanding issues remain on the table, and it would be foolish to assume that policymakers will just let these issues rest until a more opportune political time. So long as markets realize this issue is hardly over and will continue to unfold throughout 2020, progress toward a trade deal can be interpreted as a cautiously optimistic signal.
Chart of the week
Chinese Imports from the U.S. to recover on trade deal?
China imports from U.S., year-over-year growth