The next round of U.S. tariff hikes on China is little more than two weeks away, though equity and foreign-exchange markets aren’t signaling any obvious concern.

That may set things off to a rocky start in the fourth quarter, a period when thinning liquidity is perceived to increase the risk of volatility. For their part, strategists at some of Wall Street’s biggest banks -- including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. -- warn against expecting any truce in the upcoming round of U.S.-China trade talks.

“We have more conviction that, without a circuit breaker, escalation continues over the medium term, meaning any pause is fleeting,” Morgan Stanley strategists including Michael Zezas wrote in a note to clients Monday. “Investors should price in all announced actions (i.e., tariffs on both Oct. 15 and Dec. 15) even if further delays or pauses are announced.”

While news about Trump administration deliberations on curbs on U.S. investments in Chinese companies hit stocks Friday, S&P 500 futures and the yuan both rose in Asian trading Monday. That’s after China confirmed that its top trade negotiator, Vice Premier Liu He, is still heading to the U.S. for negotiations after national holidays end Oct. 7.

Yet the Morgan Stanley team highlighted that rounds of top-negotiator talks lately have been followed by tariff escalation, not by an easing in tensions.

Indeed, President Donald Trump on Aug. 1 announced a new round of tariff hikes shortly after the principal U.S. negotiators returned from talks in Shanghai. And that triggered the worst month for global stocks since May -- when investors were also handed with an escalation in tariffs. In currencies, the yuan slid through 7 per dollar, for a time spooking investors across emerging markets.

September saw both stocks and exchange rates settle, as the U.S. and China announced goodwill gestures that took tensions down somewhat.

The next round of headlines may not be so cheery.

“While trade talks so far have been noted as constructive and the delay of some tariffs led to some market optimism, we do not expect the Trump administration to reach a deal assuming continued strong U.S. economic and financial conditions,” Cesar Rojas, an economist at Citigroup, wrote last week.

Rojas flagged that, besides the upcoming tariff hikes, the U.S. Treasury’s semiannual foreign-exchange report is due in October. The department already has labeled China as a currency manipulator. Now the focus is whether the Commerce Department has any related announcement on treating the exchange rate as amounting to a subsidy, clearing the way for countervailing duties, according to Rojas.

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