Currently, both China and the US are applying maximum pressure to test each other's bottom lines. The possibility of talks breaking down is relatively small. China's rare earth countermeasures against the US will take effect in December, while the US's 100% tariff increase on China will take effect in November. The meeting between the two sides is scheduled for the end of October, essentially signaling to each other that the consequences of a breakdown in talks would be unacceptable to the other side. To reach an agreement, both sides must make significant concessions.

This escalation between China and the US is a tactical one, a pre-negotiation probe and card-playing. In two to three weeks in South Korea, the two sides will eventually have a meeting. During this period, the approach for many risk assets is more about buying on dips.