by Calculated Risk on 5/09/2019 07:42:00 PM

Merrill on US-China Trade:

As the US-China trade war enters a decisive phase, we outline three scenarios to help clients navigate the economic and market implications. The most favorable outcome is a near-term trade deal, with no additional tariffs. ... in our second scenario there is another round of tit-for-tat tariffs. After a brief period of uncertainty, an agreement is reached. The last and most unlikely scenario is a full-blown trade war.

An imminent trade deal should allow the global economy to continue to grow above trend. ... In the brinkmanship scenario we see downside risks to growth from higher tariffs and elevated uncertainty. A trade war, with across-the-board tariffs on US-China trade, would push the global economy towards recession. 

Friday:
• At 8:30 AM, The Consumer Price Index for April from the BLS. The consensus is for 0.4% increase in CPI, and a 0.2% increase in core CPI.