New York: Donald Trump will fold and settle for a weak trade deal with China to avoid pushing the country into a recession in a re-election year, according to the US President's former communications chief Anthony Scaramucci.

Scaramucci, an investment banker who has spectacularly fallen out with the President in recent days, said American business leaders had finally lost patience with Trump's unpredictable tariff hikes and reversals.

Anthony Scaramucci slammed his former boss, US President Donald Trump, for his handling of the US-China trade dispute. Credit:AP

The US sharemarket led a global rout on Wednesday, local time, when bond markets showed an "inverted yield curve", a development that has traditionally foreshadowed a recession.

Markets stabilised on Friday, but the local benchmark index of the top 200 ASX-listed companies was still down about 2.7 per cent for the week. The dip coincided with a busy week of earnings announcements punctuated with warnings from business leaders about potential damage from the ongoing trade war.