Danske Bank analysts believe that China's PMIs are set to remain weak in the short term, but they see no sign of a hard landing.

• “On the other side of a trade deal, the economy should recover again.
• Leading indicators are a bit mixed:

1. Lower yields still point to a lift to home sales. Construction also supported by low inventories.
2. Metal prices have softened but not collapsed.  Points to weakness but not a sharp slowdown.
3. Credit impulse stable but not yet recovered.
4. PMI exports have weakened again. Global slowdown and trade war cause strong headwind.

• Policy outlook:

1. The re-escalation of the trade war caused new headwinds. Despite a ceasefire, we expect talks to be difficult leaving uncertainty in place for some time. We expect a deal to be struck at some point in H2.
2. We expect a cut in the Reserve Requirement Ratio, more targeted lending and more consumer stimulus.

• Chinese market outlook:

1. Chinese stocks are capped for now by trade war uncertainty. Long term, we are positive.
2. We expect USD/CNY to move higher before turning lower when a trade deal is in sight.”