Does Trump’s Behavior Sound Unprofessional?
For investors as well as traders, trade-related topics have become a front-burner issue. After the US announced 25 per cent tariff on up to $60 billion of Chinese exports, it was seen that the equity prices and Treasury yields went down. However, both the countries have expressed interest in reconciling differences. When the market opened on 26 March, reversed path was observed.
Investors should allocate more of their assets to Treasury securities that are likely to experience a further decline in yields, if a global trade war erupts. Meanwhile, equities would bear the burden of the impact of this trade moves by the US. But the question arises that whether the outcome for bonds be different if China follows through on its threat to sell some of its $1.2 trillion holdings of Treasuries? This kind of moves would still not prevent a decline in bond yields as it would also cause global investors to rush to havens.
Recently, Donald Trump urged his administration to impose tariffs on an additional $100 billion in Chinese imports. However, U.S. stock-index futures fell after Trump’s move, investor reaction in equity markets across Asia wasn’t as big. Topix index of Japan and Kospi of South Korea both slipped 0.3 percent. On the other hand, Hong Kong’s Hang Seng Index rose 1.1 percent after a holiday Thursday. China’s stock and currency markets are shut until Monday due to its annual tomb-sweeping holidays. China later said it would counter U.S. protectionism “to the end, and at any cost.”
Experts believe that now it is becoming childish. Some of the experts think that at some point investors will say enough is enough, there is just too much political volatility now.