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Tuesday, 02 October 2018 15:00

JPMorgan sees all-out U.S.-China tariffs

JPMorgan sees all-out U.S.-China tariffs

With little prospect of a restart for U.S.-China trade talks, JPMorgan Chase & Co. now expects an escalation in tensions that will see higher American tariffs on all Chinese imports, sending the yuan sliding to its weakest against the dollar in more than a decade, Caspian Energy News (www.caspianenergy.net) reports with reference to Bloomberg.

 “JPMorgan has adopted a new baseline that assumes a U.S.-China endgame involving 25 percent U.S. tariffs on all Chinese goods in 2019,” JPMorgan strategists including John Normand wrote in a note Friday. While growth forecasts for both the U.S. and China aren’t much affected, thanks in part to Chinese stimulus measures, “a weaker yuan becomes part of the new equilibrium,” they wrote.

The People’s Bank of China will probably pursue a looser monetary policy to shore up growth in face of the threats to trade, and likely won’t intervene much to counter resultant downward pressure on the yuan, according to the JPMorgan analysis.

The bank now expects the yuan to drop to 7.01 per dollar by the end of December and 7.19 by September 2019, after previously projecting it at 7.02 in 12 months’ time. The currency was at 6.8857 in offshore trading Monday. The median forecast of analysts surveyed by Bloomberg is for the currency to strengthen to 6.70 by the end of next year. Deutsche Bank AG is among the yuan bears, seeing it depreciate to 7.4 next year.

More details: https://www.bloomberg.com/news/articles/2018-09-30/jpmorgan-says-u-s-china-tariffs-to-go-all-out-lowers-yuan-call

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