Markets Sent into Panic Mode as White House Adviser says Phase One Deal Over

Massive market volatility was sparked overnight after comments from the White House advisor Peter Navarro, he initially indicated to the press that the U.S.-China trade deal was “over.”

A huge wave of buying pressure came into play with the safe-have FX on this; USD and JPY, with the stocks and riskier FX; AUD, NZD being hit largely on this, everything other than USD.

However, then not long after the markets spiralled into panic mode, comments from Navarro backtracking on what he said saying they had been taken “wildly out of context”. The likes of Kudlow and also Trump further confirmed that the pact still stands.

Trump had tweeted:

“The China Trade Deal is fully intact. Hopefully they will start to live up to the terms of the ‘Agreement.’”

U.S.-China relations have reached their lowest point in years since the coronavirus pandemic that began in China hit the United States hard. Further worsening following China’s move to implement security legislation in Hong Kong.

Trump and his administration have repeatedly accused China of not being transparent about the outbreak.

As a reminder, last Thursday, Trump on Thursday renewed his threat to cut ties with China, following talks between officials on both sides.

What does this mean for the markets?

It has been shrugged off for the time being, however if there are continued signs of tension and China does not obligate on the Phase 1 trade deal, that it pledged to boost purchases of U.S. goods by $200 billion over two years, then things will drastically change in terms of tone.



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