(Washington)

The trade war between the US and China is intensifying. Investors will already be aware of the tit-for-tat $50 bn tariff packages the US and China have placed on each other, as well as Trump’s plan for a further $200 bn to be applied. However, the news is that Trump is now also preparing a comprehensive package of blockages to Chinese direct investment into the US. The amount of Chinese overseas investment flowing into the US has already plummeted to $1.8 bn in the first half of 2018, down from nearly $50 in 2016.

FINSUM: This trade spat just keeps escalating. The big risk is if China decides to sell US Treasuries and agency bonds as a payback, but we think that is still a few steps away.