Daily Commentary BY THE CURVE TEAM –

Temporary Cease Fire Called in Trade War

3rd of December, 2018

As expected over the weekend, President Trump and President Xi met on the sidelines of the G20 in Argentina to talk trade and have done a deal, agreeing to try and do a deal within the next 90 days. This comes ahead of a big week of data and events, especially here in Australia.

As anticipated, the focus was on the sidelines of the G20 as the 2 presidents met to talk trade. They have essentially negotiated a 90 day cease fire, and are both coming to the table to try and resolve this by March 1.

The markets have reacted positively this morning to the news of the cease fire, with early trade in the Asian session. We won’t know the full reaction until the US markets come online later tonight. For now, the kicking of the can further down the road should help sentiment in the short term. Time will tell over the long run whether or not we actually get a resolution on the trade war.

It’s a big week in Australia. The RBA is meeting Tuesday, and is expected to keep the cash rate on hold for further month but it’ll be interesting what they have to say in light of recent data. That data will include today’s update on house pricing, which is expected to show the biggest fall in house prices in recent memory. The other key piece of data will be GDP on Wednesday.

David Flanagan

Director - Interest Rate Markets