Markets Swing on Trade and Monetary Policy
14 Pages Posted: 14 Oct 2019
Date Written: September 22, 2019
Starting in May, prices of risky assets seesawed in response to unexpected turns in trade policy and adjustments to monetary policy.1 The rally in equity and credit markets seen in early 2019 reversed course in May on the prospect of higher tariffs on US-China trade and US imports from Mexico. Facing weakening growth and subdued inflation, central banks in advanced economies (AEs) as well as emerging market economies (EMEs) eased policy to pre-empt a further deterioration.
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