“Substantial progress”

Daily update

Sino-US talks over the weekend were described by US Treasury Secretary Bessent as making “substantial progress” on trade. Presumably so important a comment was cleared by US President Trump. The only real issue investors care about is how far the US will retreat on trade taxes. Current tariffs effectively halt bilateral trade. An 80% tariff (suggested by Trump) would also effectively halt bilateral trade. A tax of 20% would damage the US economy, but allow trade to continue.
China’s April export data, released late last week, showed ongoing growth in export values. This is being attributed to rerouting of trade, at least in part. During Trump’s first term, China rerouted about a third of trade via third countries, to help US customers avoid trade taxes.
Trump has suggested imposing a government cap on US pharmaceutical prices (presumably before imposing tariffs on imported pharmaceuticals). This will certainly produce legal challenges, which will add to the trade tax uncertainty in the sector.
With a quiet data calendar the Bank of England gets some attention—there are four speakers in the wake of the divided decision on rates. US Federal Reserve Governor Kugler talks on the economic outlook, but at this stage the US outlook relies on scenarios not certainty.