Market Comment | Renewed trade standoff leads core bonds higher

Summary

Markets’ risk-on mood faltered but recovered slightly at the end of the week, with development on U.S.-China trade talks being the key driver. On top of that, China’s weaker activity indicators further increase investors’ caution.

Key points

• Key points:
• Core bonds attracted fresh demand, but investors showed a lack of appetite for peripheral bonds, as both Fed and ECB officials signaled a monetary paused.
• The USD lost strength, but most EM currencies depreciated as optimism on trade deal faded. Spillover effects from Chile’s political riots are have also crept into Latam currencies in recent days.
• Most DM equity markets were broadly steady, despite the risk-off.

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