Last week’s seismic shift in global trade relations will reverberate through the week ahead. On Friday night share markets in Europe and the US tumbled and industrial metals slumped further as investors weighed the potential hit to growth prospects. Investor concerns are evident as bonds remain bid and gold moves towards four year highs.

Markets are caught in conflicting currents. The trade tensions imperil growth by raising the potential for bottlenecks and inefficiencies. The concerns occur against a backdrop of fear of higher interest rates, sparked by stronger growth prospects. A positive path is therefore a balance between the two. Finding a “goldilocks” sweet spot may prove difficult and the possibility of a higher volatility week is exacerbated by holiday inspired lighter volumes towards the end of the week.

However there is hope risk assets may stabilise over the coming sessions. Despite an extensive stream of tweets over the weekend President Trump declined to mention trade matters. This could be a sign that the threatened barriers are a negotiating position rather than a line in the sand. If the US is simply seeking bargaining power a solution may be found behind closed doors, and trade worries could evaporate.

Inflation numbers in the US and China PMIs on Friday lead the data releases this week. The US PCE is the Fed’s preferred read on inflation. A reading away from the forecast 1.9% quarterly rate may bring investor focus back to interest rates.