Bloomberg Daybreak: Asia Edition China's Commerce Ministry Says It's Evaluating US Trade Talks
May 2, 2025
David Finnerty, a Bloomberg FX strategist, and Bill Adams, Chief Economist at Comerica Bank, dive into the recent optimism surrounding U.S.-China trade talks, with China's Commerce Ministry signaling potential negotiations. They discuss how this could alleviate tariff tensions and its positive impact on Asian and U.S. equity markets. The pair also analyze the implications of these discussions on currencies and investor sentiment, while also touching on the Federal Reserve’s role amidst economic fluctuations.
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China Eyes US Trade Talks
- China's commerce ministry said it is evaluating possible US trade talks, signaling potential easing of tariff tensions.
- Markets view even preliminary talks positively given the over 100 tariffs between the two countries.
Japan's Treasury Leverage Hint
- Japan's mention of possibly using its $1.1 trillion US Treasury holdings as leverage signals trade tensions may escalate.
- Selling treasuries could hurt Japan as reinvesting those funds would be challenging, creating market risks.
Dollar Faces Growing Pressure
- The dollar has weakened this year amid trade tensions, benefiting the yen and euro.
- Real money funds and corporates may soon reduce dollar holdings, potentially putting further pressure on the dollar.