ICYMI: Trump delays some China tariffs, sparking risk turnaround overnight
Tariffs good... No, wait! Tariffs bad...
- China's Lui He spoke with Lighthizer and Mnuchin - report
- USTR says some products will be removed from 10% tariff list
- USTR publishes full list of delayed tariffs. All cell phones included
- Signs of a thaw in US-China talks spark dramatic market moves
- Trump says he delayed tariffs for Christmas season in case it had impact on shopping
It was quite funny how things played out overnight with Trump initially tweeting that "tariffs are a gift from China". And by the end of the day, suddenly these tariffs were supposedly delayed to help consumers during the Christmas period.
That sort of chips away at his constant reiteration that China are the ones paying the tariffs.
Nonetheless, risk assets rallied with USD/JPY pulling off a dramatic move from 105.30 to 106.80 and gold gains eroded as the commodity fell back below $1,500 before recovering slightly back to near the figure level by the end of the day.
In a subtle hint of a shift in the trade rhetoric, China even fixed the yuan stronger today in response to Trump's actions overnight.
But the big question remains, has anything really changed in the big picture?
Despite the reprieve yesterday, I'm still unconvinced that this will lead to anything good. Trump's actions felt more like he wanted to keep the run in equities going considering how global risk appetite has waned to start the week.
It certainly feels like we're heading down a familiar path. Built-up optimism. Renewed hopes. Only for all of that to be dashed when the two sides meet again and fail to compromise on more structural issues in trade negotiations.
Much like before, unless either side are willing to move their red lines in talks, I just don't see a way forward for both sides to strike a trade deal.
All this does is buy time and essentially, it is kicking the can down the road. Markets may find some respite from the news but don't expect it to alter the global economic landscape.
The global growth slowdown is set to continue (and deepen) so with a trade deal not in the offing, it's hard to imagine that the news here will provide long-lasting relief for risk assets over the next few weeks/months.