International theme: US labor market fully on the mend but trade issues cloud outlook

• Equity markets saw directional trading on Friday with positive sentiment coming from an extremely strong jobs print which was promptly offset by conflicting reports on the actual status of the US-China trade negotiation status.

The US administration has threatened China that if there is no constructive outcome from the Xi-Trump meeting in the upcoming G20 gathering, then the US would expand tariffs on Chinese imports to a total of $505 billion, though it has not mentioned the tariffs rate yet.

In terms of what we already know on future tariffs, from 2019, the tariff rates on $200 billion of Chinese imported goods is set to increase to 25% from 10%. We expect China to reciprocate on imports from the US, (i.e., to 25% as announced earlier in August). See our trade teams piece on the impact the US-China trade conflict could have on world trade next year.