We are seeing some risk-off flows in the markets at the moment. Two key Trump’s remarks could be what’s weighing on the sentiment. The first one is his answer to the question whether he would consider it a victory if the US still had high tariffs by the end of the year like 20% or 30% or 50%. He replied “total victory”. Not exactly encouraging.
The second one is when he said that he won’t call President Xi unless Xi calls him first. It’s been made clear by now that the Chinese won’t call first, so if this is the strategy, then they could remain at a standstill for a long time until the economic damage becomes big enough to force Trump to fold.
I don’t think the latter is the reason because he also said that Xi has called him and the markets don’t believe him anyway at the moment given that the Chinese keep on repeating that they haven’t had contacts. We can’t know who is lying between the two, but there’s too much uncertainty on this topic to bet the money on it.
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