Global markets (especially) US bond markets, gyrated today following reports on two policy areas (Chinese capital and NAFTA/trade policy) that are set to be sources of volatility in 2018. In both cases, the storms in a teacup seemed disproportionate with (the lack of) new information.
Press reports reminded investors about risks that may have been underpriced. U.S. trade policy (and retaliation/choices of plan B) remains to be a major risk for 2018 and beyond, that is, if US policies move beyond bark to meaningful bite. However, they seem much more likely to be sources of friction that cap profits rather than a major risk in and of themselves.
How do today’s reports play into the key themes for 2018+? What triggers could undermine the recent positive sentiment in a more sustained way? What should we expect from Chinese foreign capital allocation and trade policy? I try to answer some of these in this blog (see my 2018 outlook posts for a more general overview.
Rachel's musings on macroeconomic issues, policy and more.