The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0911 GMT - The yuan strengthens modestly against the dollar after news of the U.S.-China trade ceasefire and could appreciate further near term, ING's Lynn Song says in a note. The USD/CNY pair is now trading at a lower level than before "Liberation Day," despite monetary easing by the People's Bank of China and the back-and-forth tariff developments, the economist says in a note. Positive news could encourage capital inflows and support further CNY strengthening in the short term, though how this will balance out with what may also be conditions for a USD recovery is hard to gauge at this point, Song says. ING keeps its forecast band of 7.00-7.40 unchanged. USD/CNY last at 7.21, USD/CNH last at 7.20. (fabiana.negrinochoa@wsj.com)
0909 GMT - Continued U.S. trade progress is needed for the dollar to sustain its recovery after the U.S. and China agreed to lower tariffs considerably for 90 days, Ballinger Group forex analyst Kyle Chapman says in a note. The U.S.-China progress is "substantially better news than most were expecting" but it's not the end of the story by any means. There is an expiry date attached to lower tariffs and disagreements may grow down the line, Chapman says. The market needs convincing that trade optimism will persist for the longer-term to allow the dollar to recover to levels before April 2 reciprocal tariffs were announced, he says. The DXY dollar index rises to a one-month high of 101.792. (renae.dyer@wsj.com)
0828 GMT - The selloff in U.S. Treasurys and eurozone government bonds accelerates, pushing yields up further, after the U.S. and China reached a deal to slash tariffs. The U.S. said the reductions would last for 90 days while the two sides begin further talks. Ten-year eurozone government bond yields extend their rise, with the 10-year Bund yield last up 7 basis points to 7.625%, according to Tradeweb. The 10-year Treasury yield increases 7 basis points to 4.446%. (emese.bartha@wsj.com)
0827 GMT - The euro is likely to remain under pressure on optimism over a de-escalation in the global trade war after the U.S. and China agreed to significantly lower tariffs, Convera strategist George Vessey says in a note. Encouraging signals from U.S.-China trade talks have reinforced the pattern of inverse moves between risky assets and the euro, he says. "Recent market dynamics have positioned the euro as a hedge against U.S. policy uncertainty, benefiting from safe-haven flows when equities decline."However, risk appetite is improving on signs of easing trade tensions. Any further trade progress could accelerate the euro's losses, he says. The euro falls to a one-month low of $1.1083, according to FactSet.(renae.dyer@wsj.com)
0812 GMT - Shares in European automakers jump after the U.S. and China agreed to slash tariffs for the next 90 days, pending further talks. The major de-escalation in the trade war between the two countries boosted European equity markets and sent shares in Stellantis up 7% in early trade with Porsche and Mercedes-Benz both gaining over 5%. Shares in BMW rise 4.4% while Volkswagen rises 3.5%. (dominic.chopping@wsj.com)
0810 GMT - Sterling rises to a five-week high against the euro as risk sentiment improves after the U.S. and China agreed to lower tariffs significantly. Both sides agreed to cut tariffs to 10%. The reductions will last for 90 days while negotiations continue. Sterling is also supported by an improved trade picture for the U.K. following deals with the U.S. and India along with upcoming negotiations with the EU, ING's Francesco Pesole says in a note. The Bank of England's cautious stance on interest-rate cuts is another supportive factor. The euro falls to a low of 0.8421 pounds and ING sees scope for it break below 0.8400. Against a stronger dollar, however, sterling falls to a four-week low of $1.3162.(renae.dyer@wsj.com)
0759 GMT - Bitcoin rises to a three-and-a-half-month high after news that the U.S. and China have agreed to lower tariffs substantially. U.S. Treasury Secretary Scott Bessent said the two sides had reached a deal for a 90-day pause on tariffs. Reciprocal tariffs are now at 10% each. The news boosts appetite for risky assets including cryptocurrencies. Bitcoin rises to a high of $105,716, according to LSEG. (renae.dyer@wsj.com)
0759 GMT - The magnitude of U.S.-China tariff reductions is larger than expected, according to Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management in a commentary. "This reflects both sides recognizing the economic reality that tariffs will hit global growth and negotiation is a better option going forward," Tai says. The 90-day period may not be sufficient for the two sides to reach a detailed agreement, but it keeps the pressure on the negotiation process, he says. The immediate market reaction has been positive and Tai expects market to get back to a "risk-on sentiment" in the near term. Pressure on the U.S. Fed to cut rates may also ease for the time being, he says. (tracy.qu@wsj.com)
0759 GMT - The outcome of the U.S-China trade talks is better than market expected, Pinpoint Asset Management chief economist Zhiwei Zhang says in a note. The two sides agreed to lower tariffs substantially. "While this is not a final solution, it is a good starting point for the two countries to negotiate a full range of issues, including but not limited to trade," he says. From China's perspective, this meeting is a success as it manages to get the tariffs down significantly without making concessions, he adds. Given the current developments, China is unlikely to roll out more fiscal stimulus in the foreseeable future as the growth outlook has brightened, he says. (sherry.qin@wsj.com)
0757 GMT - A better-than-expected outcome to initial U.S.-China trade talks suggests that markets will likely correct recent pessimistic views of Chinese macroeconomic data, ANZ Research analyst Zhaopeng Xing says. The U.S. and China agreeing to lower tariffs far beyond what many had been expecting signals that a key overhang for the Chinese economy has been eased for now. Many forecasters had recently cut growth outlooks for China, citing the impact of punitively high U.S. tariffs on Chinese goods. Xing expects the next step in negotiations to result in a bilateral standard for trade, before a final deal is reached within the next one to two years. (jiahui.huang@wsj.com)
0757 GMT - Oil prices rise on market optimism as the U.S. and China agree to suspend most mutual tariffs pending further talks. Brent crude is up 2.4% at $65.46 a barrel, while WTI is up 2.6% at $62.62 a barrel. Oil has gained on a general risk-on sentiment in the market, as the lowering of the tariffs improves the outlook for the global economy. That raises the prospect of a limit to weakness in oil demand, ANZ Research analysts say in a note. That said, concerns over higher supply continue to hang over the market. OPEC's move to accelerate planned production hikes signal a significant shift in supply policy, ANZ writes. (joseph.hoppe@wsj.com)
0755 GMT - Chinese tech and auto companies surge in Hong Kong as news of a U.S.-China deal to lower tariffs buoys sentiment. The benchmark Hang Seng Index extends gains to 2.7% in afternoon trade, on track for its best close in over two months. Temporary relief that tariffs will be eased on goods like electronics and tech is lifting shares of companies like Apple supplier Sunny Optical, which is up 17%. Lenovo, the world's largest PC maker, jumps 11%. BYD increases 7.2% and Li Auto puts on 7.3%. Alibaba rises 5.6% and Tencent is 4.3% higher. (sherry.qin@wsj.com)
(END) Dow Jones Newswires
May 12, 2025 05:11 ET (09:11 GMT)
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