After months of mutual covers, growing tension between Washington and Beijing and descending in the markets, the economic struggle between the two powers seems to enter a trajectory of relaxation. In the focus: A series of statements with an recruited message that came out of the Trump administration.
The markets have immediately reacted with sharp increases on the stock exchanges, calm bonds and coin markets. However, as in recent months, uncertainty has ruled and every statement or tweet can change the image.
What changed the picture?
The one who started lowering the war tone, after raising the sharp tariffs, was American Finance Minister Scott in St., who told a group of investors last Tuesday that “will be a de -escalation” in the trade war with China. “There is a chance to reach an agreement in the near future and no one thinks the current situation is sustainable.”
St. noted that he believes that the possibility of calming the tensions between the economic powers “should give the world and market sighs.” He also emphasized that the purpose of Trump’s policy “does not disconnect economic connections.” A few hours later, it was already Trump himself, who said that China’s coverings would probably not be 145%, but also not zero.
Another cut that pressed investors and gained a reassuring message from the president is the independence of the Federal Bank and the status of chairman Jerome Powell. Too soon, the fear of markets is harmed by the Fed’s independence and an attempt to intervention in the US administration in the monetary policy decisions.
The damage is already done
Despite the momentary optimism in the markets, the sharp declines that characterize Wall Street from the beginning of the year, and more so since the presentation of the tariff program in early April, are far from deleted.
Since two April, the S&P 500 and also the NASDAC has weakened about 7% of the European Sotxx 600 index compared to only 4%. While in February 500 S&P reached a new peak – it has dropped almost 1,000 points since.
Trump’s policy steps did not help the markets: American bond returns were sharply rising, and even began to escape massive global investors from the safe channel. Even now, it is not at all sure that a step in the policy will change the situation.
Furthermore, the dollar index, which has been estimated to have the currency performance against the central currency basket, has weakened ten base points since the beginning of the year. The dollar’s positioning as a refuge coin and reserve has been weakened in other coins, such as the euro and the Japanese wine have been strengthened at his expense. In addition, the gold has re -recorded new highs due to the risk hatred of markets as a safe channel for non -risk enthusiasts.
The severe injury is not only in markets. The macro of the American economy has also absorbed the blow. Expecting inflation for 5 years has been 35 years peak. Economic activity and private consumption have slowed down the US and dragged a sharp negative growth in the first quarter of the year. This is not an internal US event of course, the international currency fund has cut the global economy in the global growth of the global growth.
One man’s market
As mentioned, US and world markets are recovering after the reassurance of the US government. But the current increases are not a sign of the direction for the near future.
In any case, if Trump continues to refer his attention to other matters on the chapter: The president updates that he still hopes the federal bank will soon drop interest and not “too late” – Trump has a heavy interest in lowering the interest rate that will encourage market markets, as well as a $ 9 burden.
Also, the president’s support is now at low, according to Reuters. When the middle elections are about to apply in a year and a half. The grain rule for the full Republican rule began to flow. The question is: will Trump know how to leverage the calm to stabilize the economy, or is it a temporary respite before another storm.
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