19/09/18

Is The Market Right To Ignore The Latest China Tariffs? One Bank Answers



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Is The Market Right To Ignore The Latest China Tariffs? One Bank Answers
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In the aftermath of Monday's additional tariff announcements, the most interest market response was how well financial markets - particularly equities and commodities, and to a lesser extent emerging markets - responded on both Tuesday and Wednesday to what was a clear escalation of the ongoing trade war. The explanation most frequently offered is that this was the result of overly pessimistic positioning and tariffs at the lower end of what was proposed. However, according to BofA much of it could also be a "clear the air" reaction to the passing of a risk event and the possibility of negotiations continuing despite the escalation.

Is this a reasonable assumption? An analysis by BofA FX strategists argues that for FX ....

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