Analysts at Danske Bank note that the main market mover yesterday was a Bloomberg article quoting U.S. trade officials as saying that the U.S. and China was moving closer to a phase one deal.

• “The upbeat comments were in stark contrast to signals by US President Donald Trump, who said on Tuesday: "I like the idea of waiting until after the election for the China deal". That Trump was likely bluffing was supported by the trade officials saying yesterday that Trump was speaking "off the cuff" and that they expected a deal to be negotiated before 15 December, when new tariffs are set to be imposed on China. The news led to a turn in risk sentiment, with stock markets and bond yields moving higher again.
• We continue to believe that a phase one deal will be struck in December, as Trump badly needs China to buy US agricultural goods soon. The US election is moving closer and US farmers, who deliver critical votes in three important swing states, have been the main victims on the US side of the trade war. Without a deal to secure China buying farm goods again, it could be very hard for Trump to win the election. China has reacted very sharply to a US bill on Xinjiang going through Congress, but there are not yet any indications that this is affecting the trade talks.”