It’s just two weeks until 15 December, when the US will implement another round of tariffs on Chinese imports if no significant progress in the trade war has been made.
Over the weekend, however, China stated that a US pledge to scrap tariffs cannot replace the rollback of tariffs. So, for China to make a deal, the US has to lower tariffs on at least some Chinese goods. Complicating things is the fact that Trump signed the so-called Democracy Bill supporting Hong Kong protesters, an act for which China has pledged to retaliate. At the same time, the impact of the ongoing trade war is real. Chinese imports from the US are down 27% from their peak, which could hurt the leaders of both countries.
Equity markets, however, seem to favour a deal to be made, leaving an asymmetric outcome (marginal gains if there is a deal, significant losses if there is no deal) on the table. This has made us reduce the overweight in equities, while remaining underweight in high yield bonds.
![China Imports From US China Imports From US](https://d51-invdn-com.akamaized.net/content/picb6b8211e2d35a8e958bfb205e501b32d.jpg)