Trump ratchets up pressure on China - TDS

Analysts at TD Securities note that the US President Trump's tweets threatening an escalation of tariffs hit EM assets, with equities sliding, while in FX, CNH bore the brunt of losses.

Key Quotes

“We think Trump may be emboldened by the strength of the US economy, and firm US equities. As such the threats could amount to a negotiating ploy.”

“The immediate reaction has been for China's delegation to reportedly delay or cancel its trip to Washington.”

“China is not as vulnerable as it was just a few months ago. Even so higher tariffs could put recent signs of growth stabilization under threat.”

“The stakes are now clearly much higher. Failure to agree on a deal could have bigger ramifications on China and the global economy.”

“After the initial bout of pressure, consolidation is likely until we see some form of clarification.”