TARIFFS: China Considering Fentanyl Deal To Kickstart Trade Talks With US - WSJ
The Wall Street Journal reports that "Beijing is considering ways to address the Trump administration’s gripes over China’s role in the fentanyl trade... potentially offering an off-ramp from hostilities to allow for trade talks to start." The Journal notes that "discussions remain fluid" and China "would like to see some softening of stance from President Trump".
- According to the report, "Chinese leader Xi Jinping’s security czar, Wang Xiaohong, in recent days has been inquiring about what the Trump team wants China to do when it comes to the [precursor] chemical ingredients used to make fentanyl..."
- The report comes amid a marked tone shift in the rhetoric between Beijing and Washington. The Chinese Ministry of Commerce said in a statement today that the US has approached China to sound out trade talks, noting, "China is currently evaluating this.”
- The New York Times reported earlier: “China’s signaling about its willingness to talk comes as the tariffs appear to have already taken a toll on Chinese producers. An official report on manufacturing activity in April showed that factories in China had experienced their sharpest monthly slowdown in more than a year.”
- Wu Xinbo at Fudan University said: “We know that China and the United States have contacts at the working level. The key now is that China hopes that the United States will give a clear signal that it is sincere in negotiating, and then it can move from this kind of working contact to formal negotiations.”
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US 10YR FUTURE TECHS: (M5) Tests Key Resistance
- RES 4: 112-23+ 1.618 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 3: 112-15 61.8% of the Sep 11 ‘24 - Jan 13 bear cycle (cont)
- RES 2: 112-13 1.500 proj of the Jan 13 - Feb 7 - Feb 12 price swing
- RES 1: 112-02+ High Apr 02
- PRICE: 111-17+ @ 17:08 BST Apr 2
- SUP 1: 110-26+ 20-day EMA
- SUP 2: 110-11/06 50-day EMA / Low Mar 27
- SUP 3: 110-00 High Feb 7 and a key support
- SUP 4: 109-21+ Trendline support drawn from the Jan 13 low
Treasury futures are holding on to their latest gains following the recovery from last week’s low of 110-06+ (Mar 27). The outlook remains bullish and attention is on key resistance at 112-01, the Mar 4 high. It has been pierced, a clear break would confirm a resumption of the uptrend and maintain a price sequence of higher highs and higher lows. This would open 112-13, a Fibonacci projection. Initial support to watch is 110-26+, the 20-day EMA.
FOREX: EUR/USD Stretches to New High Through London Close
A combination of EUR strength and USD weakness continues to play out through the London close, as the clocks ticks down headed into Trump's Rose Garden appearance at 1600ET/2100BST.
- The original EUR buying phase followed the Bloomberg report that the EU are planning emergency measures to guard the economy against Trump's tariffs, possibly bolstered by the rally through 1.0850 resistance and the weekly high.
- That report, twinned with headlines that Canada and Mexico are working to enhance their trade deal goes to show that tariffed countries are seemingly looking to take sharp action to both combat Trump's tariffs, as well as enhance cooperation to dampen the blow to economic growth that could follow the immediate installation of reciprocal tariffs today.
- Trump's official schedule only shows the beginning of his 'Make America Wealthy Again' event - and there's little clarity on how exactly his plans will be released: Whether he'll talk the press through a speech, or whether there will be a formal release on the White House website.
- The White House website no longer maintains a livestream page, however CSPAN and Youtube will likely have livelinks - we'll send here when available.
US: Musk To Step Back From Prominent Government Advisory Role - Politico
Politico reports that non-governmental advisor Elon Musk is expected to step back from his public-facing duties in President Donald Trump's White House, despite Trump remaining "pleased" with Musk and his Department of Government Efficiency initiative.
- Politico notes: "The transition, the insiders said, is likely to correspond to the end of Musk’s time as a “special government employee,” a special status that temporarily exempts him from some ethics and conflict-of-interest rules. That 130-day period is expected to expire in late May or early June."
- Should Musk's departure come ahead of the 130-day period it could be seen as the Trump administration managing political exposure to Musk's sliding approval rating. A new Marquette Law School survey found: "Approval of how Elon Musk is handling his work in the Department of Government Efficiency (DOGE) stands at 41%, with disapproval at 58%. Musk’s personal favorability is 38%, with 60% unfavorable."
- The report doesn't offer much new information but appears to counter some reporting suggesting that Trump would look to extend Musk's temporary 130-day cap.
- Trump told reporters at the White House this week that his Cabinet secretaries have “gotten a big education” from their experience with DOGE. Trump added: “There will be a point at which the secretaries will be able to do this work [without Musk],” indicating that work to cut the federal workforce will continue.
- Notably, the report comes after a Republican underperformance in a Wisconsin Supreme Court race that was seen as a referendum on Musk's role in the Trump administration.
