Stocks offer muted cheer to latest US-China trade detente
In London, negotiators from Washington and Beijing said they had "agreed a framework on trade" that would be taken back to their leaders
Stock markets and the dollar gave a guarded welcome today (11 June) to the latest signs of progress in US-China trade talks, while awaiting more detail of what was decided and whether it would stick for long.
Bond investors were also hunkered down for a reading on US inflation that could show the early impact of tariffs on prices, and a Treasury auction that will test demand for the country's debt.
In London, negotiators from Washington and Beijing said they had "agreed a framework on trade" that would be taken back to their leaders.
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US Commerce Secretary Howard Lutnick said the implementation plan should result in restrictions on rare earths and magnets being resolved, but again offered no specifics.
"Even though details are scant, as long as the two sides are talking, I think markets will be happy," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
"It will still be very hard and it will take a long time for both sides to reach a comprehensive trade agreement," she added. "That sort of comprehensive deal usually takes years to be reached, so I'm sceptical that a framework reached at the meeting in London will be comprehensive."
The law was another hurdle as a federal appeals court allowed President Donald Trump's most sweeping tariffs to remain in effect on Tuesday while it reviews a lower court decision blocking them.
Investors, who have been badly burned by trade turmoil before, offered a cautious response with S&P 500 futures and Nasdaq futures both down 0.3%.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5%. Japan's Nikkei added 0.5% and Australian stocks firmed 0.1%.
Hopes for policy stimulus and foreign demand helped South Korean shares climb 0.9% to a near 3-1/2-year high. Chinese blue chips gained 0.8%, while the yuan held at 7.1869 per dollar .
European bourses were more restrained as EUROSTOXX 50 futures eased 0.4%, while FTSE futures dipped 0.2% and DAX futures 0.6%.
Auction angst
The reaction in currency markets was equally muted, with the dollar flat on the Japanese yen at 144.97 . The euro edged down 0.1% to $1.1417 , nudging the dollar index up to 99.115 .
Bond investors had other things to worry about and yields on 10-year Treasuries were little changed at 4.476%. An auction of $39 billion in 10-year notes is due later in the day and the market is anxious to see if foreign buyers turn up.
Concerns about huge US budget deficits and debt have combined with unease over the White House's erratic trade policies to see investors demand a higher term premium for holding Treasuries.
Data on US consumer prices for May might also show some initial upward pressure from tariffs, though analysts assume it will take a few months to fully show in the series.
Median forecasts are for the headline CPI to rise 0.2% and the core 0.3%, which would nudge the annual rates up to 2.5% and 2.9%, respectively.
Anything higher would be a setback to hopes for another rate cuts from the Federal Reserve and could see bonds sell off. Markets imply little chance the Fed will ease at its meeting next week or in July, but have priced around a 60% chance of a move in September.
In commodity markets, gold gained 0.6% to $3,341 an ounce .
Oil prices eased from near seven-week highs ahead of US inventory data.
Brent dropped 10 cents to $66.77 a barrel, while US crude eased 4 cents to $64.94.
