The Dow futures are in the red following the response of China towards new sanctions imposed by the U.S., fueling fears of a possible recession. | Source: Shutterstock
The Dow futures are in the red once again following the response of China towards new sanctions imposed by the U.S., fueling the drop of the bond yield and fears of a possible recession.
Max Baucus, a former U.S. ambassador to China, said in an interview with CNBC that the growing nationalism in China is “emboldening President Xi,” which could allow the government to prolong the trade dispute throughout 2019.
“Don’t forget … Chinese (are) very patient historically, they’ll wait it out, they’ll play lots of different angles. They’re going to try to hang in there, waiting for President (Donald) Trump to come to them. There’s a feeling that nationalism is getting a little stronger … I think that’s also emboldening President Xi,” he said.
If the next round of trade talks between the U.S. and China end with little progress, the sentiment around the Dow Jones and the global equities market is expected to worsen, leading investors to ponder about the likelihood of a recession in the short to medium term.
Baucus emphasized that China is concerned about establishing a full accord with the Trump administration in the current phase of the talks.
“The Chinese are afraid to reach a deal with this president — it may not last, they can’t count on it, he might change his mind again.”
Is a recession likely as Dow struggles?
In late August,