Negative development at the G20 Trump-Xi meeting could lead the world to the edge of recession

Stocks are likely to see a temporary relief rally and bonds could sell off if there is a ‘ceasefire’ declared in the trade wars by the U.S. and China this weekend, but the damage to the global economy could continue until a tariff-ending deal is struck.

Wall Street has been handicapping the outcome of the much anticipated meeting between President Donald Trump and President Xi Jinping, and many investors believe the two will likely agree to hold off on new tariffs and restart negotiations, but existing tariffs would not be rolled back by much, if at all.

The meeting, at the G-20 summit, is so important that market pros broadly see it as an event that could affect the course of markets for the rest of the year; impact the trajectory of global economic growth, and help determine when and what actions the Federal Reserve and other central banks might take.

While few expect an absolute failure at the meeting, UBS economists said if that were the case and the trade war escalated with new tariffs, the world could see a recession-like slowdown in growth.

Source: CNBC

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