The tit-for-tat tariff threat between China and the US intensified last week, and from a near-term US growth and inflation perspective, the impact of the tariffs discussed so far is not very high. Key Quotes “The impact can be more meaningful via the financial channel (lower corporate earnings and weaker equities) and the capital channel (fear of China selling Treasuries).” “We believe China will continue to meet incremental U.S. measures with proportional responses, though this could begin to move to measures of a more political nature, and not purely related to tariffs or quotas. It is however unlikely that China would use the renminbi (weakness) as a punitive trade weapon, though we see natural fundamental pressures pushing USDCNY to 6.60 by year end.” “We also don’t think that China is likely to sell Treasuries because it would be extremely counterproductive.” “Recent slowing of Chinese growth should slow the extent of reserve accumulation, lowering China’s demand for Treasuries going forward.” “We think that a trade war is ultimately a stagflationary shock for the US which could slow the pace of Fed rate hikes. Even if inflation rises amid tariffs, the Fed will likely view it as a one-time shock.” “Meanwhile, the growth impact can be more long-lasting given the disruption to supply chains. Thus we like owning 3yr nominal Treasuries, 10y real rates and 5yr TIPS breakevens. Receiver skew should remain well bid given the downside risk to growth and financial conditions from a trade war.” FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next German IFO and US new home sales in focus – TDS FX Street 5 years The tit-for-tat tariff threat between China and the US intensified last week, and from a near-term US growth and inflation perspective, the impact of the tariffs discussed so far is not very high. Key Quotes "The impact can be more meaningful via the financial channel (lower corporate earnings and weaker equities) and the capital channel (fear of China selling Treasuries)." "We believe China will continue to meet incremental U.S. measures with proportional responses, though this could begin to move to measures of a more political nature, and not purely related to tariffs or quotas. It is however unlikely that China… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.