Business Cycle Weaker As Trade Tensions Continue
Danske Markets | Apr 20, 2018 07:08AM ET
We see clear signs that the global business cycle has peaked in early 2018 in line with our expectations outlined in Research: Global business cycle moving lower , 19 April 2018.
While the cycle is softening, we still expect growth levels to stay above potential growth in 2018 and 2019. US fiscal easing will temper any deceleration in 2019. Nevertheless, declining PMI levels across regions tends to cause some anxiety about the strength of the recovery, giving less support to risk assets and putting a cap on bond yields.
h2 Trade tensions continue /h2The trade spat between the US and China has changed arena the past week as another battle is being fought in the tech area . On Monday, the US banned US sales to the Chinese telecommunications equipment maker ZTE for seven years, saying it had broken a settlement agreement. ZTE is one of the leading tech companies in China within telecoms equipment and gets 15% of its supplies from US companies. The move from the US could quickly backfire though. China has not yet approved a takeover deal by the big US tech company Qualcomm (NASDAQ:QCOM) of Dutch semiconductor company NXP. China is going through an antitrust review and said this week it had found issues hard to resolve regarding the deal. An equally big problem for US tech companies could be that Chinese consumers are now posting patriotic statements on social media in China and continued obstacles for Chinese companies in the US would risk triggering a form of consumer boycott in China, see Reuters .
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