US to lower tariffs on China, to include a base 10% plus 20% fentanyl levyUS-China deal reportedly does not cover de minimis exemption for e-commerce shipmentsBessent: We have reached agreement with China on a 90-day pause, moving down tariff levelsGreer: We have a constructive path forward to have a positive conversation with ChinaBessent: We want a decoupling with China for strategic necessitiesBessent: It is implausible that tariffs on China go below 10%Bessent: I could see a Trump-Xi call happening in the coming weeks, monthsTrump: Drug prices to be cut by 59%, plus!Trump wants lower interest rates but his strategy is likely to lead to higher ratesHow have interest rates expectations changed after the US-China news?BOE's Lombardelli: Caution remains appropriateMore from BoE's Lombardelli: Latest US-China discussions are good newsBOE's Greene: Wage, inflation measures are moving in the right course but still too highMore from BoE's Greene: Disinflation process in underway
Markets:
USD leads, JPY lags on the dayEuropean equities higher; S&P 500 futures up 3%US 10-year yields up 7.6 bps to 4.451%Gold down 3.0% to $3,224WTI crude up 4.0% to $63.50Bitcoin down 0.5% to $103,794The tariff levels for both sides are brought down by 115%. So, that means the US is still imposing 30% tariffs on China while China is imposing 10% tariffs on the US during this 90-day pause period.
US Treasury secretary Bessent had a lot to say during the session, reaffirming that the new mechanism in place for discussions will facilitate much calmer discussions and actions between both sides. He made sure markets know that the mechanism "will avoid the type of escalation" from last month.
As for the dollar, the gains were solid across the board. USD/JPY jumped up by a good 300 pips at the highs today, extending gains from around 146.20 to above 148.00 now on the day. Meanwhile, EUR/USD is down over 1% to 1.1100 and GBP/USD also down 1% to 1.3175 currently.
In other markets, bond yields are also racing higher on the optimism as markets pare back rate cut bets as well. Oil is a strong beneficiary as it climbs up by 4% to $63.50. And gold is one of the bigger casualties in all this, down over 3% to $3,224 on the day.
This article was written by Justin Low at www.forexlive.com. Read More Details
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