While current headlines might make you think that geopolitics is going to hell in a handbasket, things right now are better than normal around the world — at least from the market's perspective — according to BlackRock's latest global risk update.

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Reproduced from a BlackRock report; Chart: Axios Visuals

The big picture: The respite is largely due to apparent breakthroughs in trade between the Trump administration and the U.S.' traditional allies. But some of the analysis' most impactful risks — like the state of play between the U.S. and China — are also among its most likely to worsen given the uncertainty of current policymaking, leaving the world facing potential volatility.

The good:

  • The analysis views tension surrounding global trade as one of the biggest, likeliest threats facing world markets, but it sees the U.S. as an increasingly stable player. The recent agreements with Mexico and the EU on trade make it seem like President Trump is attempting to salvage — or at least work to reform — America's trade deals with its core allies.
  • The biggest threat on the board — a complete breakdown between Russia and NATO — remains the least likely to take place, even as heightened tensions continue to grab headlines worldwide.

The bad:

  • Economic relations between the U.S. and China are not good — and steadily worsening, especially given the latest trade war salvo between the two nations. The analysis views continued tensions here as the market's most likely disruptor. And because the issue is so intertwined with the North Korea conflict, there are multiple ways for it to potentially boil over.
  • Emerging countries are marked by continued upheaval. Some, like Brazil and Mexico, are set or likely to have populist leaders in place soon. And Turkey is facing a continued currency crash and isolation from the international sphere amid the increasingly authoritarian rule of President Recep Tayyip Erdogan.

The bottom line: BlackRock's risk measure is notably volatile. Take a look: The markets viewed the world's geopolitical risks as above-average back in June during the height of the uncertainty surrounding North Korea. Things have trended downward significantly since then on more positive news, but we live in an age when 280 characters can turn the world on its head.Go deeper: Take a look at the full report, which includes detailed analyses of what BlackRock has deemed the 10 greatest geopolitical risks.

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