Trade Talks with China Start This Week

Markets shed risk as trade fears swirl. Treasury rates fell ~4-6 bps across the long end of the curve today, with the 2-year and 10-year ending ~5 bps lower at ~3.78% and ~4.30%, respectively, after markets digested President Trump’s comments that he would take a firmer hand in tariff negotiations by dictating terms. Major equity indices extended yesterday’s declines, falling ~0.77% – 0.95% on the day. After hours, however, positive news emerged that the U.S. and China will hold trade talks in Switzerland on May 8th, a key step forward.

Trade talks to begin with China. A welcome development, today the U.S. government announced that Treasury Secretary Bessent and U.S. Trade Representative Greer will meet in Switzerland with Chinese trade representatives. The meeting is set to occur on May 8th with Bessent meeting an unnamed official who the Treasury Department called China’s “lead representative on economic matters,” possibly Vice Premier He Lifeng, while Greer will meet with his Chinese counterpart. In the statement, Bessent said, “I look forward to productive talks as we work towards rebalancing the international economic system towards better serving the interests of the United States.” The announcement follows Bessent’s comments earlier today during a testimony to lawmakers on Capital Hill, where he admitted that trade talks with China have not yet occurred, despite the President saying that Xi Jinping has reached out to him to discuss trade.

U.S. – U.K. trade talks progress. U.K. Prime Minister Keir Starmer has made negotiating a trade deal with the U.S. a chief priority, and reports indicate that a team of British officials currently in Washington may be approaching an initial deal with the U.S. Still, the U.K. has indicated it won’t be forced into a deal, rather it will sign a deal that is ultimately in its interests. The U.K. Department for Business and Trade said in a statement, “Talks on an economic deal between the U.S. and U.K. are ongoing…we will continue to take a calm and steady approach to talks and aim to find a resolution to help ease the pressure on U.K. businesses and consumers.”