### POV: OVERLY OPTIMISTIC ON TRADE.........>

US TSYS: ### POV: OVERLY OPTIMISTIC ON TRADE RESOLUTION?; DIFICULT TO PRICE

US/China trade headline sensitivity returned in a big way this week (debatably

justified after Pres Trump threatens tariff increase to 25% on issues that

include draconian intellectual property practices by China.

- Current session: round 2 of sharp risk-off sentiment: Global equities tumbling

w/ Treasury yields (10YY at 2.4602 currently vs. last Fri's high print of

2.5648%); VIX surged >40% to 18.80H Monday, 19.98H today.

- Some dealer strategy desks posit this week's risk-off moves are overdone, that

markets aren't pricing in enough chance for trade resolution in the near term

and that hard deadlines can be eased (difficult to model) as markets focus on

data that are weighed down over uncertainty of trade. Mon good example of how

any "hint" of positive trade development spurs risk-off unwind w/eminis

recovering from massive overnight sell-off (2885.25L to 2938.0H). 

- Don't expect the dynamic to end anytime soon, however, despite Trump threat to

increase tariffs. "Trade talks may drag into 2020" as MNI Exclusive noted

earlier, the "two countries won't stop L/T cooperation or communication."