U.S.-China waves as risk aversion heats up

a deep correction in European and U.Sstocks late FridayEurope's 50 fell 1.83 per cent in a single day, while the US S.P500 fell 1.90 per cent, its biggest drop in three monthsThere are two reasons for this deep correction: first, the renewed uproar in U.S.-China trade talks, sparking investors' risk aversion, and second, the U.Sdebt yield curve, the first since 2007, has been reversed since the Fed's big bang, and recession warnings triggered a sell-offmkn
Trade talks between China and the United States have been in the upbeat mood since the Chinese delegation's visit to the United States at the end of FebruaryMrTrump's suspension of further tariffs on $200 billion in goods and his public anticipation of a final deal have further raised investors' risk appetiteDomestic stock markets, in particular, have benefited from positive policies and talks to meet expectations, with the Shanghai composite index gaining as much as 27 per cent since the new yearMarkets are already waiting for the top leaders of the two sides to meet in the coming weeks to finalize the dealOn Wednesday, however, MrTrump tweeted that the multiple rounds of talks between the Two-China Talks did not involve cutting tariffs at allEven if the agreement is reached, the previously imposed tariffs will not be considered until the White House approves China's commitmentThe comments, which followed the negotiations, were widely expected by the Chinese side to back down and the US to withdraw taxesAsked by a reporter on Thursday about the Foreign Ministry's views on the remarks, Foreign Ministry officials responded that they hope to reach a mutually beneficial and win-win agreement at this stage, where substantial progress has been made, and specific issues are recommended to the Ministry of CommerceThen on Friday, China's Ministry of Commerce announced anti-dumping duties on some goods from the United States, Japan, South Korea and the European UnionMoreover, after several rounds of negotiations, China and the United States suddenly announced that they would be held again in late March and early April, and the negotiation process did not appear to have been as smooth as officially advertisedIn the context of the Commerce Department's tough moves, the trade dispute appears to be showing signs of widening, raising concerns and raising risk aversion againmkn
The Fed's meeting also took place last weekThe meeting was a big deal, with the Fed announcing that it would not raise interest rates in 2019, narrowing its range and halting it in SeptemberIn addition, the Federal Reserve cut its U.Seconomic forecast across the board, cutting GDP growth to 2.1 percent from 2.3 percent and the unemployment rate to 3.7 percentEven though U.Sstocks have climbed out of the hole at the end of last year, such conservative monetary tightening policies and pessimistic economic outlook have far exceeded market expectationsThe dollar index fell further, With U.Sdebt breaking higher and the stock market tetheding toward the economic downturn and monetary easingThanks to the Fed's decision, U.S10-year Treasury yields fell sharply to 2.44 percent on March 22, the first reversal since 2007 and even falling into the 2.25-2.5 percent U.S benchmark interest rate range The reversal of the yield curve means that the bond market has given strong recession expectations, while the lower benchmark rate in the US is a sign that expectations of a Fed rate cut are beginning to emerge The emergence of the iconic phenomenon, the sharp sell-off exacerbated the decline in the stock market mkn
　　Short-term risk markets may still be in turmoil for the outlook for the future As investors are beginning to see that u.S.-China trade talks are not going as smoothly as expected, even if the U.S insists on not withdrawing tariffs, they could eventually break down However, we should also recognize that steady development is China's number one priority at this stage, so the Sino-US negotiations may be based on tariffs do not worsen on the basis of a long time to seek time for China's economic stability, the United States is also willing to patiently negotiate with China to determine the benefits Therefore, once the macro environment returns to average, it will help risk appetite to overtake risk aversion mkn
　　On the Fed's side, the overall resolution is a positive sign Even if the economy starts to peak, risk markets will continue to lend in the medium term on the back of a sharp drop in monetary tightening, and a reversal of historical yields will not immediately trigger a recession or a stock market crash The dollar is short-term, but now the main logic of foreign exchange has shifted to a global margin pattern, so the dollar index is still on a long-term upward trend, with the relatively strong U.S economy still on the rise, without having to worry especially about the Fed's switch The long-term trend of the u.S dollar/RMB exchange rate will depend on the Sino-US negotiations, at this stage to be stable, there will be no sharp appreciation and depreciation trend mkn on Friday night, the U.S and European stock markets deep lying back Europe's 50 fell 1.83 per cent in a single day, while the US S.P 500 fell 1.90 per cent, its biggest drop in three months There are two reasons for this deep correction: first, the renewed uproar in U.S.-China trade talks, sparking investors' risk aversion, and second, the U.S debt yield curve, the first since 2007, has been reversed since the Fed's big bang, and recession warnings triggered a sell-off mkn
　　Trade talks between China and the United States have been in the upbeat mood since the Chinese delegation's visit to the United States at the end of February Mr Trump's suspension of further tariffs on $200 billion in goods and his public anticipation of a final deal have further raised investors' risk appetite Domestic stock markets, in particular, have benefited from positive policies and talks to meet expectations, with the Shanghai composite index gaining as much as 27 per cent since the new year Markets are already waiting for the top leaders of the two sides to meet in the coming weeks to finalize the deal On Wednesday, however, Mr Trump tweeted that the multiple rounds of talks between the Two-China Talks did not involve cutting tariffs at all Even if the agreement is reached, the previously imposed tariffs will not be considered until the White House approves China's commitment The comments, which followed the negotiations, were widely expected by the Chinese side to back down and the US to withdraw taxes Asked by a reporter on Thursday about the Foreign Ministry's views on the remarks, Foreign Ministry officials responded that they hope to reach a mutually beneficial and win-win agreement at this stage, where substantial progress has been made, and specific issues are recommended to the Ministry of Commerce Then on Friday, China's Ministry of Commerce announced anti-dumping duties on some goods from the United States, Japan, South Korea and the European Union Moreover, after several rounds of negotiations, China and the United States suddenly announced that they would be held again in late March and early April, and the negotiation process did not appear to have been as smooth as officially advertised In the context of the Commerce Department's tough moves, the trade dispute appears to be showing signs of widening, raising concerns and raising risk aversion again mkn
　　The Fed's meeting also took place last week The meeting was a big deal, with the Fed announcing that it would not raise interest rates in 2019, narrowing its range and halting it in September In addition, the Federal Reserve cut its U.S economic forecast across the board, cutting GDP growth to 2.1 percent from 2.3 percent and the unemployment rate to 3.7 percent Even though U.S stocks have climbed out of the hole at the end of last year, such conservative monetary tightening policies and pessimistic economic outlook have far exceeded market expectations The dollar index fell further, With U.S debt breaking higher and the stock market tetheding toward the economic downturn and monetary easing Thanks to the Fed's decision, U.S 10-year Treasury yields fell sharply to 2.44 percent on March 22, the first reversal since 2007 and even falling into the 2.25-2.5 percent U.S benchmark interest rate range The reversal of the yield curve means that the bond market has given strong recession expectations, while the lower benchmark rate in the US is a sign that expectations of a Fed rate cut are beginning to emerge The emergence of the iconic phenomenon, the sharp sell-off exacerbated the decline in the stock market mkn
　　Short-term risk markets may still be in turmoil for the outlook for the future As investors are beginning to see that u.S.-China trade talks are not going as smoothly as expected, even if the U.S insists on not withdrawing tariffs, they could eventually break down However, we should also recognize that steady development is China's number one priority at this stage, so the Sino-US negotiations may be based on tariffs do not worsen on the basis of a long time to seek time for China's economic stability, the United States is also willing to patiently negotiate with China to determine the benefits Therefore, once the macro environment returns to average, it will help risk appetite to overtake risk aversion mkn
　　On the Fed's side, the overall resolution is a positive sign Even if the economy starts to peak, risk markets will continue to lend in the medium term on the back of a sharp drop in monetary tightening, and a reversal of historical yields will not immediately trigger a recession or a stock market crash The dollar is short-term, but now the main logic of foreign exchange has shifted to a global margin pattern, so the dollar index is still on a long-term upward trend, with the relatively strong U.S economy still on the rise, without having to worry especially about the Fed's switch The long-term trend of the u.S dollar/RMB exchange rate will depend on the Sino-US negotiations, at this stage to be stable, there will be no sharp appreciation and depreciation trend mkn