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LGT Navigator: No agreement on trade dispute in sight

May 13, 2019

On the capital markets, reactions remained relatively calm for the time being following the further intensification of the trade conflict between the US and China. This came after the talks between the US and China in Washington came to an end with no tangible result and the US government's initiative to increase special tariffs on Chinese imports of goods worth USD 200bn from ten to 25 percent came into force on Friday. Trump announced on Twitter that there was no reason at all to hurry and that the USA would receive additional revenue. No date has yet been set for the resumption of bilateral talks.

The minutes of the US Federal Reserve's last monetary policy decision on March 20 confirmed the Fed's wait-and-see attitude. There are still "significant uncertainties" in the economic outlook, and latest US inflation data will probably not put pressure on the Fed to raise key interest rates again in the near future. ECB President Mario Draghi continues to see growth risks for the euro zone and recent economic data have confirmed that the pace of growth in the euro area is slowing. Nevertheless, the likelihood of a recession remains low.

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