Bitcoin Rises on U.S, China Agree to Cut Tariffs — Market Talk

0759 GMT - Bitcoin rises to a three-and-a-half-month high after news that the U.S. and China have agreed to lower tariffs substantially. U.S. Treasury Secretary Scott Bessent said the two sides had reached a deal for a 90-day pause on tariffs. Reciprocal tariffs are now at 10% each. The news boosts appetite for risky assets including cryptocurrencies. Bitcoin rises to a high of $105,716, according to LSEG. ([email protected])0759 GMT - The magnitude of U.S.-China tariff reductions is larger than expected, according to Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management in a commentary. "This reflects both sides recognizing the economic reality that tariffs will hit global growth and negotiation is a better option going forward," Tai says. The 90-day period may not be sufficient for the two sides to reach a detailed agreement, but it keeps the pressure on the negotiation process, he says. The immediate market reaction has been positive and Tai expects market to get back to a "risk-on sentiment" in the near term. Pressure on the U.S. Fed to cut rates may also ease for the time being, he says. ([email protected])0759 GMT - The outcome of the U.S-China trade talks is better than market expected, Pinpoint Asset Management chief economist Zhiwei Zhang says in a note. The two sides agreed to lower tariffs substantially. "While this is not a final solution, it is a good starting point for the two countries to negotiate a full range of issues, including but not limited to trade," he says. From China's perspective, this meeting is a success as it manages to get the tariffs down significantly without making concessions, he adds. Given the current developments, China is unlikely to roll out more fiscal stimulus in the foreseeable future as the growth outlook has brightened, he says. ([email protected])0757 GMT - A better-than-expected outcome to initial U.S.-China trade talks suggests that markets will likely correct recent pessimistic views of Chinese macroeconomic data, ANZ Research analyst Zhaopeng Xing says. The U.S. and China agreeing to lower tariffs far beyond what many had been expecting signals that a key overhang for the Chinese economy has been eased for now. Many forecasters had recently cut growth outlooks for China, citing the impact of punitively high U.S. tariffs on Chinese goods. Xing expects the next step in negotiations to result in a bilateral standard for trade, before a final deal is reached within the next one to two years. ([email protected])0757 GMT - Oil prices rise on market optimism as the U.S. and China agree to suspend most mutual tariffs pending further talks. Brent crude is up 2.4% at $65.46 a barrel, while WTI is up 2.6% at $62.62 a barrel. Oil has gained on a general risk-on sentiment in the market, as the lowering of the tariffs improves the outlook for the global economy. That raises the prospect of a limit to weakness in oil demand, ANZ Research analysts say in a note. That said, concerns over higher supply continue to hang over the market. OPEC's move to accelerate planned production hikes signal a significant shift in supply policy, ANZ writes. ([email protected])0755 GMT - Chinese tech and auto companies surge in Hong Kong as news of a U.S.-China deal to lower tariffs buoys sentiment. The benchmark Hang Seng Index extends gains to 2.7% in afternoon trade, on track for its best close in over two months. Temporary relief that tariffs will be eased on goods like electronics and tech is lifting shares of companies like Apple supplier Sunny Optical, which is up 17%. Lenovo, the world's largest PC maker, jumps 11%. BYD increases 7.2% and Li Auto puts on 7.3%. Alibaba rises 5.6% and Tencent is 4.3% higher. ([email protected])0743 GMT - Yields on U.K. government bonds climb as investors shift to risk assets and away from safe haven assets after the U.S. and China agreed to lower tariffs substantially. "The risk-on sentiment is making a return and markets could ride that momentum until told otherwise," ING analysts say in a note. The 10-year gilt yield rises 7 basis points to 4.628%, Tradeweb data show. ([email protected])0739 GMT - The Swiss franc could become less sought-after as a safe-haven currency if the economic risks surrounding U.S. trade policy subside, Commerzbank's Ulrich Leuchtmann says in a note. The franc typically appreciates in times of a global economic slowdown because Swiss interest rates are typically lower than other currency areas and it has limited scope to cut rates. The Swiss National Bank's lower limit for rates is likely -0.75%, he says. However the SNB will probably shy away from taking rates this low, Leuchtmann says. The euro rises 0.3% to 0.9383 francs, while the dollar rises 1% to a one-month high of 0.8443, according to FactSet, after the U.S. and China agreed to lower tariffs substantially. ([email protected])0729 GMT - The dollar rises to a one-month high after U.S. Treasury Secretary Scott Bessent said the U.S. and China have agreed to lower tariffs substantially following talks at the weekend. The U.S. reciprocal tariff on China will be lowered to 10% from 125% while China has also agreed to lower tariffs on U.S. imports to 10% from 125%. The two sides have also reached an agreement on a 90-day pause on tariffs. The DXY dollar index rises to a high of 101.414. The euro falls to a one-month low of $1.1132, according to FactSet.([email protected])0633 GMT - The dollar rises after Treasury Secretary Scott Bessent said the U.S. made substantial progress in trade talks with Chinese officials in Geneva, Switzerland at the weekend. The U.S. and China are set to give more details on the talks Monday. Greater clarity on what the two nations have agreed will likely be needed to give markets the "required confidence to say that peak trade uncertainty and tit-for-tat tariffs are in the rear view mirror," Pepperstone strategist Michael Brown says in a note. For the time being, the prevailing uncertainty remains, meaning the dollar's current strength might not be sustained, he says. The DXY dollar index rises 0.2% to 100.574.([email protected])0630 GMT - Progress in the U.S.-China trade talks over the weekend allows markets to open in a risk-on mood, causing government bond yields in the eurozone to rise. In early trade, 10-year government bond yields rise by up to 6.5 basis points across the board, with the 10-year Bund yield up 5 basis points at 2.604%, according to Tradeweb data. Better risk sentiment usually means lower appetite for safe haven bonds, such as German Bunds, which could drive yields higher. Money markets currently price in two interest-rate cuts by the European Central Bank for this year, seeing the terminal deposit rate at 1.75%, according to LSEG. ([email protected])0630 GMT - Signs of a U.S.-China trade deal back the case for risk-on, paving the way for the German bond-yield curve to steepen, says Commerzbank Research's Rainer Guntermann in a note. "With risk sentiment looking better supported, the steepening bias in Bunds is likely to extend," the rates strategist says. German 10-year Bund yields are likely to establish a range above 2.5% despite the benign net supply pattern, he says. In addition, recovering oil prices are also limiting the downside for yields, he says. A steepening of the yield curve means the gap between short- and long-dated bond yields widens. The 10-year Bund yield rises 5 basis points to last trade at 2.605%, according to Tradeweb. ([email protected])