The Trump-Xi summit is narrowing the geopolitical discount on China dollar credit while rekindling overseas risk appetite, according to Bloomberg Intelligence. The US announced a two-month extension to its trade truce with China on Tuesday as President Xi Jinping landed in America for his first state visit in 11 years. His meeting with US President Donald Trump would boost lower-rated bonds, including property, local-government financing vehicles and corporate credits, BI said.

"The tail risk of extreme economic decoupling has receded," Jason Lee, BI credit strategist, said in the report. "This should improve the macroeconomic outlook by reducing uncertainty and encouraging global funds to re-engage with Chinese credit without the headwinds of a deepening trade war."

The summit’s outcome is supporting China dollar credit through restored investor confidence in cross-border capital flows and the continued availability of offshore dollar funding, both of which had been under pressure from escalating geopolitical tensions. This story was produced with the assistance of Bloomberg Automation.