The US and China are set to restart trade talks

Welcome to your guide to the week ahead in the markets. This week, US-China trade talks, US inflation, Brexit gets closer and UK GDP announced.

US-China trade talks

The US and China are due to restart high-level trade talks on Thursday (Oct 10th) as the two sides try to hammer out an agreement on reducing tariffs. Failure to reach agreement will likely mean an escalation in tariffs and may spark fears in the market of a greater slowdown in economic activity. The White House delayed imposing tariffs on a large chunk of Chinese imports from Oct 1st until Oct 15th, whilst a range of goods have been exempted until Dec 15th. At the very least market watchers will be eyeing whether these delays can be extended, or the tariffs even scrapped. However, hopes for a comprehensive deal on trade remain low at this stage.

US inflation

The last three readings of the core CPI have shown a steady march higher in inflation, raising the prospect that the Fed could have to walk back on its rate cut ambitions should higher inflation take hold. In the 12 months through August, the core CPI increased 2.4%, the most since July 2018, after climbing 2.2% in July.

Brexit marches closer

We cannot take our eyes off the political developments in the UK as the deadline for Brexit approaches on October. In the next few days we should expect MPs, the government and the EU do a merry dance as the clock ticks down to the key European Council meeting on Oct 17th. Uncertainty is the only certainty and the pound will remain highly exposed to headline risk.

UK GDP

The monthly UK GDP figures will be closely watched in the wake of the soft PMI readings last week, which showed that the economy is close to recession. Markets increasingly think that whatever the outcome on Brexit, the Bank of England will have to cut rates before it thinks about hiking.

Heads Up On Earnings

Earnings season make be over, but there are still a few companies publishing. Make a note of these dates:

Watch the Week Ahead on XRay

There’s a lot going on this week, and we discuss the headlines in our XRay videos. Watch live or catch-up at a convenient time.

Don’t forget to email xray@markets.com any questions you have and our hosts will try to answer them.

Key Economic Events

There are quite a lot of data published this week. Here are the top events to put in your diary.