Just when the world thought things couldn’t get any worse, the US and China relationship takes a nosedive with both sides threatening serious retaliatory measures against each other. This week, the strained relationship will take center stage as markets digest the recent and possible actions from both sides.
This Week’s Economic Calendar
As the bond, commodity and currency markets continue to price in more risk to come, we’ve seen the equity market show some cautionary flows this week. This upcoming week, US-China tensions will be front of mind as markets digest flash PMI data & ongoing virus statistics.
Better-than-expect seems to be the phrase that equity markets have been banking on over the past few weeks. However, there’s an interesting divergence brewing across global macro markets as fixed income, commodities and currencies are not sharing the equity market’s recent enthusiasm.
This week the USD faces a bit of a dilemma in terms of its current drivers. On the one end general short-term ease in markets means data should drive it lower, but the threat of further safe-haven inflows remains a possibility.