Dan Ivascyn, group chief investment officer at Pimco, the US bond house, singled out the ongoing trade war between the US and China as one of the biggest risks facing investors in the coming months, warning a meaningful deal to end the year-long standoff between the world’s two largest economies will be elusive.

“We think over the course of the last several weeks, the US administration has begun to appreciate the negative knock on effects to the economy,” said Ivascyn.

“We think you could see a continued attempt to reduce some of the more negative rhetoric to calm markets further, but any type of significant deal is going to be very hard to come by.”

It is expected US president Donald Trump will meet with Chinese president Xi Jinping at a summit in Chile next month to sign a “phase one” agreement, if it is finalised in time.

Ivascyn said that a “big risk to the market” would be another ratcheting up in trade frictions between the US and China.

Ivascyn also emphasised that in the lead up to the presidential election in November 2020, “uncertainty is only going to increase from a political perspective” and that the outcome could “lead to more volatility.

Ivascyn said global growth was likely to continue to weaken, putting the risk of a recession in 2020 at one-third: Pimco expects the US Federal Reserve to cut interest rates at least once more in 2019, and added that 2020 was far more uncertain. However, Ivascyn dismissed the possibility of the Fed following other central banks and experimenting with negative interest rates, even if the economy were to deteriorate.