Macroscope | China’s bond market is the unlikely winner of US-China trade spat. Here's how

Fears of a Sino-US trade war that could derail the global trade and economic recovery have been a major destabilising force for financial markets so far this year. Investors worry that the disruptions to the global supply chain and international trade could structurally harm the world economy.

Luckily, the path to disruption is not the only way forward. With the two sides already engaging in negotiations, the chance of avoiding an all-out trade war has increased, even though a grand deal that resolves all the trade, economic and technology-related disputes remains far off. 

In the end, a watered-down version of the proposed tariffs by both sides is most likely to be implemented once the public consultation ends in the United States at the end of the month. Such an outcome is unlikely to strain the two economies much and financial markets will be relieved that economic calamity has been avoided.