The movement in interest rates – the gap between two and 10-year US Treasury bonds was as narrow at one point than it has been in more than a decade – was particularly disconcerting because the yield curve is edging towards an inversion, where short-term rates are higher than those on longer-term bonds. Every US recession for more than half a century has been preceded by an inversion of the curve, although not every inversion has been succeeded by a recession. US President Donald Trump, second right, and China's President Xi Jinping, second left, attend their bilateral meeting at the G20 Summit in Buenos Aires, Argentina. Credit:AP The unresolved trade conflict with China and slowing economic growth in Europe and Asia has raised concerns about the condition of the global economy heading into 2019. The flattening of the US yield curve feeds into that narrative of a rapid slowdown in growth.

It was the markets’ reassessment of what actually transpired on Saturday in Buenos Aires, however, that provided the catalyst for the sharemarket turmoil. The US market fell more than 3 per cent as it became apparent there were conflicting versions of what occurred. Donald Trump's senior economic adviser, Larry Kudlow says China's agreement was ''stuff they're going to look at.'' Credit:Manuel Balce Ceneta, AP As it was presented by Trump on Saturday, he and Xi had agreed that, in return for the US deferring a foreshadowed increase in the rate of tariffs on $US200 billion of Chinese exports to the US for 90 days, China would agree to purchase "very substantial’’ amounts of US products "immediately". Trump, who described the deal as "incredible,’’ claimed China would completely remove a 40 per cent import duty on American cars and had agreed to negotiate on contentious issues like intellectual property and forced technology transfers. Both the nature of the agreement and some of its detail were described quite differently by administration officials, with Trump’s senior economic adviser, Larry Kudlow saying that the commitments China gave were "stuff that they’re going to look at and presumably implement’’ and that there was no specific agreement on car tariffs.

There was confusion over the starting date for the 90-day deferment of the proposed increase in tariffs from 10 per cent to 25 per cent. Initially, administration officials were under the impression the clock would start ticking from January 1. Trump contradicted that by saying it was December 1. Loading There was confusion over China’s "agreement’’ to immediately buy large volumes of US goods, particularly agricultural commodities. China has said little about the detail of the deal and Trump’s own description of what was agreed lost some certainty between Saturday and Tuesday. He said the negotiations with China would focus on "whether or not a real deal with China is actually possible". "If it is we will get it done. China is supposed to start buying agricultural product and more, immediately. President Xi and I wants this deal to happen, and it probably will."

If it doesn’t? ‘I’m a Tariff Man,’ he tweeted. Investors should have known, when there was no joint and detailed statement from Trump and Xi after their dinner date, to treat Trump’s version of events with some scepticism. He has a history of exaggerating his achievements. The only actual achievement so far, apart from a commitment to talk, was China’s winning of an extension of the window before the proposed increase in the tariffs cuts in, which also pushes back the point at which Trump’s threat to impose tariffs on China’s remaining $US267 billion of exports to the US might be imposed. Xi gave Trump the opportunity to claim a victory without committing China to anything specific other than talking for 90 days. It is improbable to the point of being inconceivable that China will agree to the US demands designed to thwart its ambition to emerge as the dominant economy in sectors like robotics, artificial intelligence, biotech, aviation and autonomous and electric vehicles.