Analysts at National Australia Bank (NAB) notes the latest escalation in the U.S.-China trade war has reverberated through financial markets.

• "The policy response will be important – we now expect two further 25bp cuts in the fed funds rate this year. China is also likely to use policy measures to offset any tariff impact, including allowing further depreciation of its currency. 
• The pick-up in Advanced Economy (AE) growth in Q1 was not sustained in Q2, and we expect AE growth to slow further in H2 2019 before stabilising in 2020. Trade exposed Emerging Markets are struggling, with exports from East Asia falling significantly. 
• We have lowered our 2019 global growth forecast to 3.1% (from 3.2%) but our forecasts for 2020 (3.3%) and 2021 (3.5%) are unchanged. Trade policy remains a key risk and there are also other geo-political risks."