President Trump's new tariffs seem to be bringing offers to negotiate from many major US trading partners, triggering some gains as a rebound in stocks, commodities, and other risky assets.
After yesterday's dramatic decline in stock markets and other risk assets, today's Asian session saw some recovery in prices as the US Treasury Secretary claimed that more than 50 nations have approached the USA with proposals to negotiate the removal of tariffs. Notably, Japan seems to be very willing to talk, and the European Union made an offer of "zero for zero" industrial tariffs, although President Trump has said this is "not enough".
The only trading partner to be publicly taking a confrontational stance against the USA is China, which President Trump threatened a few hours ago with an additional 50% tariff. China is coming out fighting, so this seems to be the trade relationship that will probably be most damaged of all by the time the dust has settled.
Stock markets have mostly seen gains since this week's openings as rumours of negotiation approaches abound. It is clear that the US markets are coming out ahead this week so far:
Canada - TSX: -0.41%
Korea - KOSPI: -0.92%
Market players will be putting primary importance on trying to accurately forecast how tariff negotiations will play out. We can expect market volatility, rumours, and occasional dramatic announcements over the weeks ahead. Beginner and less sophisticated traders will likely do best following the price and trading relatively small position sizes, always using hard stop losses.
Most commodities are also lower:
- WTI Crude Oil
has recovered a bit from the 4-year low reached yesterday below $60 per barrel, but only by a little.
- Gold
is gaining again, but is still well off its recent high.
Softs are generally in decline, but few are reaching long-term low prices.
In the Forex market, price movements are less dramatic, but there continues to be plenty of activity in the market, with the commodity currencies recovering and the safe havens weakening. The strongest major currency since today's Tokyo open is the Australian Dollar, while the US Dollar is the weakest major currency, putting
the AUD/USD currency pairin focus. Most of the currency crosses which made large moves over last week are moving firmly in the opposite direction, as is typical in the Forex market.
Treasuries have given back earlier gains in line with the general rebound, with Treasury Yields bouncing back. The US 2-Year Treasury Yield has risen from 3.48% to over 3.70% over the past few days, for example.
Tomorrow will bring a policy meeting at the Reserve Bank of New Zealand, which is expected to cut its Official Cash Rate from 3.75% to 3.50%.