Market Comment | ‘Two-good’ to be true developments on trade and Brexit

Summary

Financial markets were volatile this week amid confusing trade news, general elections in the UK and central bank meetings. Early optimism, underpinned by the progress on resolving two key overhangs (US-China trade conflict and Brexit), faded at the end of the week as investors wait for more details about the trade deal.

Key points

• Key points:
• The US President and Chinese officials said a limited phase-one trade deal has been reached, but 25% tariff rate on about $250bn of Chinese goods remains in place.
• The 10Y US and Germany bond yields ended unchanged this week, although they fluctuated abruptly.
• Sterling appreciated sharply as Conservatives secured an ample majority government and will allow Johnson to deliver Brexit on January 31.
• Equity markets increased across the board.

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