The US is lower after successful talks between the US and China. Treasury Secretary Scott Bessent said weekend negotiations produced a “very successful framework” for President Trump and Xi Jinping to finalize when they meet Thursday. China’s foreign ministry reiterated it has reached a “basic consensus” with the U.S.
While details remain unclear, Beijing’s remarks and Washington’s optimistic tone suggest improving sentiment in trade relations and rising hopes for a constructive outcome from the leaders’ meeting later this week.
The progress lifted global markets, especially Nasdaq-100 futures and chip stocks, while Asian benchmarks in Japan, South Korea, and Taiwan hit new records. The upbeat tone was reinforced by new U.S. trade frameworks with Malaysia, Cambodia, Thailand, and Vietnam, and further supported by optimism after Argentina’s ruling party won a decisive midterm victory, boosting Argentine assets.
The EUR, JPY and GBP are lower vs the USD with the GBP the biggest mover at -0.23% vs the greenback. The USD is lower by -0.11% vs the EUR and -0.05% vs the JPY. The video above will take a look at the 3 major currency pairs to kickstart the US session (and the new trading week).
Looking at the other currencies, the CAD is stronger despite Trump maintaining his anger at the Ontario ad saying former Pres. Reagan did not like tariffs. The AUD is higher on decreased tension between the US and China as is the NZD.
Adding to the excitement, US Commerce Secretary Lutnick said Japan’s planned USD 550 billion investment in the U.S. will target areas such as power infrastructure, pipelines, and other assets vital to national security, calling them projects with “virtually no risk.” According to his remarks in a Nikkei interview, Japanese firms will supply gas turbines, transformers, and cooling systems to bolster U.S. energy generation capacity, while existing 15% levies on Japanese-made semiconductors and pharmaceuticals will remain unchanged.
Even as hopes from a US and China deal, and a reopening of trade in rare earths, the WSJ is reporting of a flood of private and government funding is transforming the Western rare-earth industry as the U.S. and its allies rush to reduce dependence on China after Beijing restricted exports earlier this year. Billions of dollars are pouring into American and Australian mining and refining projects, with firms like MP Materials, Lynas Rare Earths, and Ucore Rare Metals seeing surging stock prices and major new investments. The U.S. government and major financiers such as JPMorgan are backing projects to secure critical minerals vital for defense, electronics, and renewable energy, while providing price protections against future Chinese market manipulation. Despite the momentum, experts caution that building a sustainable Western supply chain will take years, as the industry remains short on experience and could falter if U.S.-China relations improve. Still, the surge marks a turning point—what some call “the beginning of the beginning”—in the effort to rebuild Western control over critical mineral supply chains.
The Fed meets on Tuesday and Wednesday with the rate decision due on Wednesday at 2 PM ET. They are expectigg to cut by 25 basis points. The Fed Chair will have a press conference after the report.
RBA Governor Michele Bullock said the central bank is successfully lowering inflation while keeping employment strong, though she noted the recent unemployment uptick was a surprise and may reverse next month. She described policy as “still a bit restrictive” but signaled caution on rate cuts, emphasizing that inflation is within target and the labor market remains tight. Bullock acknowledged that a rate cut may be considered if the job market weakens, yet stressed that rates may not fall as much as in other countries. She added that U.S. tariffs could be deflationary for Australia and that labor supply growth is slowing but not collapsing. Overall, her tone was mildly hawkish, suggesting the RBA will likely hold rates steady unless the upcoming quarterly inflation report shows a clear downside surprise.
Not so good news is the US remains in a shutdown.
Nevertheless, the major US indices are cheering on the hope for the trade deal with the NASDAQ leading the way. Al 3 indices are on pace for record closes with the full day of trading left in front of traders:
- Dow industrial average up 255.80 points
- S&P index up 61 point
- NASDAQ index up 344.84 points
This week will be the pinnacle of the earnings calendar with the likes of Amazon, Apple, Alphabet, Microsoft, Meta all reporting with other big names also on the schedule. So far earnings have been mostly above the consensus.
In the US debt market, yields are higher by about 2 basis points across the curve:
- 2-year yield 3.503%, +1.9 basis points
- 5 year yield 3.628%, +2.4 basis points
- 10 year yield 4.020%, +2.3 basis points
- 30 year yield 4.605%, +1.9 basis points.
Taking a look at other markets:
- Crude oil is near unchanged at $61.43
- Gold is down -$75.98 or -1.87% at $4034.
- SIlver is down -$1.04 or -2.18% at $47.58
- Bitcoin is up $655 at $115.206, but up sharply from Friday's close at $111,039.
