By Bloomberg – Re-Blogged From Newsmax
There’s a risk that tough trade talk between the U.S. and China will return with gusto in 2018 and investors may not be prepared.
Trade disagreements between the two nations were something of an afterthought in 2017 as concern about North Korea’s nuclear weapons program dominated the political relationship between the two nations. That could soon change, according to Exante Data LLC Chief Executive Officer Jens Nordvig.
“One of the big wild cards for next year is there’s going to be a real escalation in terms of U.S.-China trade tensions, and I don’t think the market’s pricing that at the moment,” Nordvig said in a recent Bloomberg Television interview.
U.S. President Donald Trump again acknowledged his concerns about China in a New York Times interview published later on Thursday, saying that he’s been “soft” on trade disputes with the country in the hope that its leaders would curtail North Korea’s nuclear development.
In a sign of the market’s tranquility, the one-year implied volatility on the dollar-yuan exchange rate is close to half the peak it reached in the wake of Donald Trump’s election last year. Reduced levels of implied volatility show that the market isn’t adequately priced for an escalation in U.S.-China friction, according to Nordvig.