US: Trade deal with Mexico is a positive step – Danske Bank

Analysts at Danske Bank note that the US and Mexico struck a trade deal yesterday sending stock markets and bond yields higher.

Key Quotes

“The deal will replace NAFTA and Trump said yesterday that he hopes Canada will join the agreement as well. The deal has given some hope that Trump is moving back from the brink of a global trade war after his recent agreement with the EU as well.”

“What s left is still a solution to the US-China trade war but it may be part of Trump's strategy to isolate China to put maximum pressure on them to get more concessions before making a trade deal.”

“We still believe Trump will turn the pressure up a notch on China by announcing tariffs on another USD200bn worth of Chinese imports in September. However, market hopes of a trade deal with China sooner or later are moving higher as Trump strikes other deals.”