Focus on US-China high-level trade talks this week – Danske Bank

Analysts at Danske Bank offer a brief preview of the key event risks to be watched out for in the week ahead.

Key Quotes:

“Focus this week will turn to the 13th round of high-level trade talks between the US and China taking place in Washington on Thursday and Friday. If we get an interim deal we expect a short-term relief in equity markets, see US-China Trade - 60% probability of an interim deal, 2 October 2019.

On the other hand, a failure to reach such a deal should put risk appetite under pressure again as US tariffs on USD250bn of Chinese goods are then set to move up from 25% to 30% on 15 October (next week).

Minutes from the latest Fed meeting will be scrutinized on Wednesday as will a number of Fed speeches. The Fed is set to meet again on 31 October and markets price around 75% probability of a rate cut following the weak data last week.

Another important topic to follow will be the development in the Brexit drama. French President Macron has said negotiations must be concluded by the end of this week (same signals were sent by EU ambassadors last week).

ECB minutes on Thursday will give more insights into the ECB easing package, which as it turned out came with significant disagreement within the ECB Governing Council.

On the data front we will get the US core CPI tomorrow and US consumer confidence for October from the University of Michigan on Friday.”