Trump says that the deal is a "tremendous" one, but is it really?
In short, I still reserve my doubts about the whole situation as both sides are giving the bare minimum in trying to resolve things in the big picture.
The trade truce certainly beats any further escalation in the dispute and provides a temporary reprieve for global markets but it will do little to alter the fate of both economies - as well as the global economy - in the long run.
The US has suspended tariffs against China this month but hasn't yet made up its mind on the December tariffs, as they are pending a formal agreement and enforcement of the trade truce by China over the next few weeks.
Meanwhile, all China has done is offer more agricultural purchases - which they are more than happy to offer - with vague promises about its currency, IP protection and opening up of its financial services sector.
It doesn't read to me that this trade truce is a "tremendous" one to be honest, let alone one that moves us closer to ending the dispute between the two countries.
It's merely a symbolic gesture that appeases both parties in order to serve their respective agendas but it isn't going to be a game changer in the long haul.
So, what does this mean for markets?
For now, we could see a bit part reprieve in terms of market optimism and what not but I reckon that the biggest winner in all of this is gold and bonds.
The trade truce here will have little impact overall in aiding the global economy so as the slowdown continues to be more protracted, global central banks will have little choice but to continue easing monetary policy further.
And that will continue to provide a strong impetus for gold and bonds (I would favour the former more) if you look out over the next year or so.
What do you think of the US-China trade truce achieved last week? Is it going to have significant consequences for markets? Do you think markets will start changing with regards to risk appetite? Let us know in the comments below.
