China's trade surplus to the US expanded to a record level in August
The trade surplus hit $31.05 billion in August and it continues to add fuel to the already heating up trade rhetoric between the US and China. Over the weekend, Trump took another swipe at China on the trade front with his tweets here.
And the threat of more tariffs/further escalation in the trade rhetoric is leading to some uneasy tones at the start of trading today for equity investors. Currencies and bonds are hardly moved but it's still early days so be on the look out for any changes in market sentiment later on.
The Hang Seng and CSI 300 indices are both down 1% on the day while the Shanghai Composite is down 0.7% now after the break. Asian equities are mostly in the red barring Japanese stocks - which saw the country's GDP improved from preliminary estimates in Q2.
Despite tariffs hitting the Chinese economy, exports to the US are still showing relative resilience and that will be something that will continue to draw the ire of Trump in this whole dispute. If that is any indicator, this trade rhetoric is far from over and his threats of an additional $267 billion on top of the $200 billion tariffs may just be the beginning.
In the medium-term, that's bad news for risk assets and for currencies like the aussie and kiwi in particular - not least when they're already dragged down by directionless central bank policies.
