00:00Obviously, some progress or signs of de-escalation in the U.S.-China trade relationship.
00:04Do you think that sets us up then pretty well into year end?
00:07So first of all, you need a bit of conviction whether or not we'll get a deal in about seven days' time.
00:13And we've been thinking that because the complete collapse of the bilateral trade talks
00:19will be extremely painful for both sides,
00:21we still assume that there will be some sort of a ceasefire persisting into the end of the year and early next year.
00:26And if that's the case, even if we have a bit of disruption in the third and fourth quarter
00:31due to any residual payback from, you know, trend shipment and the front loading,
00:38we'll likely get the positive, you know, market sentiment continuing into the end of the year and early next year.
00:44And this is the reason why we still maintain a bit of a risk tilt in our portfolios.
00:52What's also been painful has been the U.S. government shutdown.
00:55And today it's also in the spotlight because of the U.S. CPI data that is due
01:00and the questions around the quality of the data because of the shutdown.
01:06How much volatility are you expecting around the data point?
01:12Well, first of all, the stakes for September CPI is pretty high because markets have been waiting for it.
01:17And we do think we'll get the sign of tariff-related spike in the inflation.
01:23But at the same time, market participants have been anticipating this for quite some time.
01:29So our view here is that we're not going to get a disruptive reading that suggests that the trajectory for U.S. CPI
01:37will be much higher than what the market participants are thinking.
01:40Our view is that maybe core PCE inflation peaks around low 3 percent by the end of the year and early 2026 before it starts converging to 2 percent target.
01:51Now, for the data quality issues, it's very unique.
01:54Government is still shut down.
01:55It might affect data collection for the October CPI, and that could certainly, as you said, create a bit of volatility around the quality of the data because we'll have to see.
02:09We had similar experiences before, but given the very strong push for the Trump administration, maybe this remains as a concern for market participants in the next few weeks.
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