In One Chart: Why optimistic stock-market investors and pessimistic bond traders might both be wrong about the U.S.-China trade war

When it comes to trade and financial markets, maybe everyone is getting it wrong.

The bond market “is too pessimistic, the equities market too optimistic, and the FX market complacent,” said Bank of America Merrill Lynch currency strategists Athanasios Vamvakidis and Adarsh Sinha, in a Wednesday note (see chart below).

Bank of America Merrill Lynch

The analysts are homing in on the seeming disconnect reflected by a simultaneous rally in the stock and Treasury markets.

Read:Investors face a conundrum: Which market is wrong?

“In our view, it is difficult to see the Fed cutting by as much as markets expect, if at all, if there is a U.S.

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