{"id":171635,"date":"2025-06-10T00:46:12","date_gmt":"2025-06-10T00:46:12","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/171635\/"},"modified":"2025-06-10T00:46:12","modified_gmt":"2025-06-10T00:46:12","slug":"us-and-china-play-nice-for-now","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/171635\/","title":{"rendered":"US and China play nice\u2014for now"},"content":{"rendered":"

Wall Street tiptoed into the new week like a cat burglar in dress shoes\u2014deliberate, quiet, and fully aware that one false step could trip every alarm in the building. U.S. stocks<\/a> eked out modest gains in a Monday session that felt more like the opening credits than the main act, as investors brushed aside the usual haze of policy gridlock and soft macro reads. The MSCI World index, unfazed, drifted to a fresh record high\u2014gravity-defying risk appetite now the default setting, powered by tariff postponements and the growing perception that trade blows will be more featherweight than knockout.<\/p>\n

On the surface, it was another yawner\u2014low volume, tight leash, and the kind of range-bound churn that puts caffeine traders out of business. The S&P 500 drifted inside a paper-thin 40bps band, closing with all the enthusiasm of a shrugged shoulder\u2014barely in the green at the bell, up less than 0.1% by 4 p.m. But beneath the surface, momentum is waning. The rally engine is still idling, but it\u2019s starting to sound like it\u2019s running on fumes.?<\/p>\n

At the center of yesterday\u2019s economic maelstrom was China\u2019s May \u201cdata dump\u201d\u2014a reality check dressed up in mixed signals. Headline exports rose 4.8% year-on-year, but the real story was in the fracture lines. Shipments to the U.S. declined 34.4%\u2014the most significant drop since the early COVID-19 crash\u2014while exports to the rest of the world increased 11.4%. The message was unambiguous: the American consumer is no longer the gravitational anchor of China\u2019s export galaxy. Released just as U.S.-China trade envoys squared off in London, the numbers underscored what markets have suspected for months\u2014strategic decoupling isn\u2019t a threat. It\u2019s already happening.<\/p>\n

The London talks themselves? Less d\u00e9tente, more diplomatic chess. There was some polite handshake optics. U.S. Commerce Secretary Howard Lutnick called the talks \u201cfruitful,\u201d while Treasury\u2019s Scott Bessent gave the diplomatic thumbs-up, citing a \u201cgood meeting.\u201d Trump, never one to undersell a headline, added from the White House lawn: \u201cWe\u2019re doing well with China. China\u2019s not easy\u2026 I\u2019m only getting good reports.\u201d Markets took the spin at face value\u2014for now\u2014though seasoned traders know that \u201cfruitful\u201d is often just code for\u00a0nothing blew up\u2026 yet.<\/p>\n

However, aiding the market, Trump even extended a conciliatory gesture to Elon Musk, resulting in a 4.5% boost for Tesla. In contrast, Apple\u2014long considered the poster child for U.S.-China tech symbiosis\u2014missed the AI opportunity at its developer conference, declining by 1% and highlighting just how sensitive this market is to perceived innovation gaps.<\/p>\n

Despite the murky and deflationary China backdrop, Asia looks set to ride this sugar high of “progress” into Tuesday\u2019s open\u2014futures point to gains in Tokyo, Shanghai, and Hong Kong. Sydney, always the cautious cousin, is flatlining. Bonds rebounded after Friday\u2019s NFP<\/a> wage growth spook wore off, and the dollar backed off as traders repositioned ahead of Wednesday\u2019s key CPI print.<\/p>\n

The S&P 500 is still hovering about 2% below its February highs, and the Street is now split\u2014whether the next leg up is powered by actual earnings beats or just the vacuum left by fading fear. The latest wave of bullish calls from Wall Street titans feels a bit like a weatherman forecasting sunshine while standing in a hurricane watch. Let\u2019s be clear\u2014this isn\u2019t about fundamentals. It\u2019s a pure play on tariff tail risk going quiet and the Fed cutting earlier than the dot plot wants to admit.<\/p>\n

If you\u2019re not buying the \u201cfading fear \u201d narrative, then go take a long, hard look at the VIX<\/a>. A 63% collapse over the past nine weeks\u2014the steepest volatility crush on record\u2014isn\u2019t just a blip. It\u2019s a signal that the market isn\u2019t pricing risk, it\u2019s\u00a0ignoring\u00a0it. Either we\u2019re on the cusp of a miracle mile full round trip… or we\u2019re dancing on a volatility time bomb with noise-cancelling headphones on. When fear gets this cheap, it rarely stays that way.<\/p>\n

Make no mistake\u2014this is still a market with its finger on the panic button. Tariff tantrums are on temporary mute, not cancelled. The Fed enters blackout mode ahead of its June 18 meeting, and any unexpected CPI twitch could set the whole house of cards fluttering. For now, though, bulls are dancing on a tightrope of tech hope, policy easing and trade theatre. Just don\u2019t look down.<\/p>\n

In FX, traders are still clinging to a glass-half-full worldview. Risk assets are riding the \u201c no fear \u201c narrative, with the MSCI World Index tagging new all-time highs The ongoing US-China trade talks in London are keeping the geopolitical temp in check\u2014just enough to anchor the dollar in its recent range as we count down to Wednesday\u2019s CPI print.<\/p>\n

Over in Europe, the euro is starting to flash some tactical buy signals. It\u2019s holding the line post-ECB, with Lagarde\u2019s steady-hand messaging giving eurozone<\/a> bulls a reason to stay long. The market\u2019s only pricing one more cut\u2014way out in December\u2014and if whispers of German fiscal easing get louder when Berlin drops its new budget later this month, EUR\/USD<\/a> could find firmer footing. Don\u2019t call it a breakout yet\u2014but it\u2019s starting to walk like one.<\/p>\n","protected":false},"excerpt":{"rendered":"Wall Street tiptoed into the new week like a cat burglar in dress shoes\u2014deliberate, quiet, and fully aware…\n","protected":false},"author":2,"featured_media":171636,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7757],"tags":[748,25892,3422,17629,393,33481,4884,257,1024,16,15],"class_list":{"0":"post-171635","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-london","8":"tag-britain","9":"tag-centralbanks","10":"tag-currencies","11":"tag-economicindicator","12":"tag-england","13":"tag-equities","14":"tag-great-britain","15":"tag-london","16":"tag-tradewar","17":"tag-uk","18":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114656312296524524","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/171635","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=171635"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/171635\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/171636"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=171635"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=171635"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=171635"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}