In May, risks of a trade shock sharply rose following US President Donald Trump's increasingly aggressive rhetoric towards China.
The Federal Reserve, which had last year been on a hiking cycle, came to the rescue by signalling a rate cut later in the year, providing relief to worried investors. What does The Fed's change in tune mean for markets? This "insurance" cut aims, as in 1995 and 1998, to prevent worsening US data descending into recession, and it follows a pattern of global monetary easing, with Japan having interest rates of -0.1% and the 'Japanified' eurozone just zero. With the rate cut, however, the highly overpriced dollar will at last be weaker, making emerging market equities and bonds more ...
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