Market Comment | Markets go Ho-Ho-Ho on trade deal

Summary

The confirmation of a US-China phase-one trade deal cheered up markets ahead of Christmas. Nonetheless, uncertainty resurfaced in the markets at some point as UK Prime Minister downplayed expectations of any extension of the Brexit transition period beyond end-2020.

Key points

• Key points:
• Core sovereign yields jumped, while Italy’s risk premium widened significantly.
• Sterling reversed last week’s appreciation post-UK election results amid renewed concerns about a hard Brexit.
• Gains in equity markets with the banking sector outperforming in Europe.

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