A recent report by QCP Capital highlights several factors contributing to the decline in volatility in financial markets, while also predicting a possible escalation of the trade war.
Market Conditions and Macroeconomics
QCP Capital notes that, in the context of steady interest rates from the FED, short-term inflation expectations remain high. The policy committee continues to adopt a hawkish stance, emphasizing the significance of tariffs as a risk to growth. Authorities reaffirm a 'wait-and-see' strategy until inflation dynamics become clearer.
Risks Beyond the Usual
Analysts indicate that markets no longer react as sensitively to geopolitical events, such as the tensions between Israel and Iran. However, QCP Capital warns of the resurgence of trade war risks. The expiration of the EU’s tariff suspension against the US, due on July 9, becomes a crucial turning point.
Key Dates and Forecasts
QCP Capital highlighted several critical upcoming dates:
* July 14: EU expected to begin imposing retaliatory tariffs on the US * August 12: End of the 90-day tariff truce between China and the US * August 31: Expiration of long-term exemptions for Chinese imports.
These dates could trigger periodic pullbacks in risk assets, but QCP maintains an optimistic baseline scenario, noting that the overlapping interests between China and the US may lead to a stable agreement.
With the ongoing hedging trend, short-term correction expectations remain relevant. However, the prospects for cooperation between China and the US inspire optimism in the market.
