Macro Strategy Views: Trade talks breakdown

In our weekly podcast, Macro Strategy Views, we try to make sense of the recent escalation in the global trade war. Senior Analyst in FX Strategy Jens Nærvig Pedersen chairs the podcast and Chief China Analyst Allan von Mehren and Senior Analyst Lars Merklin join him. The escalation in the global trade war is not due to tactics on the US side. It represents a real breakdown in talks. The decline in USD/JPY and rise in implied volatility made headlines in FX markets. The market had become too optimistic on the outlook for a trade deal and recovery in global economic growth. We further discuss the outlook for a trade deal and for markets. A deal is now more likely to come during the second half of the year in our view and it may be that markets have to force the US back to the negotiating table.