It is largely considered that the moves by both countries could be leverage plays ahead of a bilateral trade meeting between Trump and Xi later this month.

The US Government shutdown lumbers on with neither side showing signs of willingness to compromise on the key issue of healthcare cuts. It is being reported that the administration has started to implement permanent layoffs in some departments

President Trump flies to the Middle-East this week as his ceasefire plan moves to a critical phase. Hamas is due to return all hostages this week. In return, Israel is due to release 2,000 Palestinian prisoners before both sides move to a disarm & withdraw phase.

In Europe, political instability continued in France, German data showed that it is facing challenging economic headwinds - industrial production plunged 3.3% with the automotive sector bearing the brunt. Exports also fell with shipments to the US falling 20.1% year-on-year.

After a strong start, equity markets finished the week in the red. The resurrection of US/China trade tensions caused stocks to contract sharply in Friday trading. The S&P 500 fell by 2.7% on the day to close 2.43% down for the week.

The tech-heavy NASDAQ notched a one day drop of 3.6% to close down 2.53% for the week, while the Stoxx 600 dropped by 1.1%.

Bond yields fell last week in the US as the potential for trade tensions ruffled investor sentiment. The 10-year US Treasury yield declined by 12bps over the week to 4.04%.

The German bund equivalent was down by 9bps to 2.65% as poor economic data spurred the Government to react with budget cutting measures.

After a strong rally early in the week, equity markets fell on Thursday as issues relating to auto-parts maker First Brands caused concern in the Collateralised Loan Obligation (CLO) market.

The US Government shutdown continues and is now in day 19, just two days away from being the second longest. In France, the new government survived a confidence vote by pushing out pension reforms but it also had its credit rating cut by S&P.

This week, despite the US Government shutdown, we will still get inflation data released on Friday and other than that, the main focus of markets will be on Quarterly earnings reports which continue apace.

After running aground a couple of weeks ago, troubled auto-parts maker First Brands made headlines again when it appeared that they had been pledging the same assets as equity for multiple loans.

Investors in certain leveraged assets (CLO's) will likely face write-offs, this caused a market sell off on Thursday with JP Morgan's Jamie Dimon commenting that there may be more ahead as there is never only one cockroach.

Polls show that Republicans are being blamed by the public more than Democrats but likely not enough to make them want to do an about turn on the cuts to healthcare spending that are behind the shutdown. It seems very likely that, by Weds we will be in the second longest shutdown

The S&P ratings downgrade adds more pressure to a struggling French govt. As it is the second of three major agencies to remove France's AA rating, certain bond funds will now need to sell French debt. The news was already priced in by investors and had limited impact on yields.

The ceasefire in the middle east looks to have held on by a thread over a volatile weekend. At the same time, reports are out that President Trump denied Ukraine's request for Tomahawks and urged President Zelensky to cede territory to Russia or face destruction by Putin's forces

After a strong start to the week fuelled by conciliatory noises from both the US and China in relation to trade tensions and comments from the US Fed Chair supporting the case for rate cuts, equity markets stuttered on Thursday driven lower by a sell-off of Regional Bank stocks.

Despite these jitters, markets stabilised on Friday and the major indices closed out in the black. The S&P 500 closed up 1.7% and the STOXX 600 finished the week up 0.37%

Bond yields fell last week on both sides of the Atlantic (bond yields fall as bond prices rise) as US Fed comments suggested further rate cuts were on the way and investors were spooked by the First Brands issue creating a demand for save haven assets.

The 10-year US Treasury yield declined by 3bps over the week from 4.04% to 4.01% The German bund equivalent was down by 6bps from 2.65% to 2.59%.