The Day at a Glance | August 5 2020

The Top

· China and the US will revise their trade agreement around mid-August.

· Retail sales reach pre-pandemic levels in Europe.

· Economic indicators: A slight slowdown regarding the non-manufacturing ISM in the US is expected (55 e.); private employment disappoints in the US in July (167k vs 1.9M e.).

Economic environment

US Trade Representative Robert Lighthizer and his Chinese counterpart Liu He will have a meeting on August 15th to revise the progress made regarding the “phase 1” objectives 6 months after the agreement`s signing. The meeting corresponds to what was stipulated in the agreement and will take place in midst of growing tensions between both countries. Recent reports suggest that China lags far behind its stated goals but appear to raise no concerns in Washington as Lighthizer recognized China`s efforts to make structural changes and mass purchases in June. It`s unlikely there will be any disagreements in the meeting as President Trump has shown less and less interest in the agreement, and his rhetoric has turned towards the virus`s spread and Chinese companies` actions against US national security. The perception that trade relations will remain intact prevails among markets given the economic recovery`s fragility in both countries and the absence of incentives to stop it.