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  • Confusing and contradictory statements were the leading characteristic of news flow in the US China trade war over the last week. Market sentiment remains positive and investors anticipate some form of agreement that will be marketed as “Phase 1”. The risk to this position is domestic politics in both countries – China will be adverse to criticism on recent developments in Hong Kong whilst any agreement signed by Trump will be denigrated by the Democrats.
  • Eurozone Q3 GDP slightly beat expectations at 1.2% y/y with general relief expressed that Germany technically escaped a recession. However, policymakers and investors remain vigilant to the increased probability of a recession and the necessity for continued monetary and fiscal support.
  • Inflation figures (see chart) from the US remain relatively close to the Federal Reserves stated target however, Powell is more perturbed about inflation expectations which remain far too well anchored in light of the substantial stimulus provided and the historically low levels of unemployment.