Macro Mondays A Path to Trade War Diffusion
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May 13, 2025 Explore the surprising connection between a football match and a new U.S.-China trade deal, and its impact on cryptocurrency. Delve into the geopolitical landscape, focusing on potential peace talks between Ukraine and Russia, and the resulting market ripple effects. Discover how Ethereum is bouncing back as oil prices spike and learn about inflation's influence on investment strategies. Finally, dive into the latest initiatives aimed at lowering prescription drug costs and how they tie into the global economic scene.
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US-China Trade Truce Insight
- The recent US-China 'deal' resembles more of a trade truce or pause than a full agreement.
- This signals a first step toward short-term peace, allowing tariff reductions and easing import constraints for the US.
Weaker USD as Shared Goal
- A weaker US dollar seems likely as China stimulates domestic demand and the US aims to close trade deficits and incentivize Chinese Treasury purchases.
- Both countries share this goal, implying a future understanding around foreign exchange regimes favoring a softer dollar.
Goldilocks Scenario Emerging
- Inflation expectations rose due to tariff fears but should now fall as the trade issues ease.
- This could create a Goldilocks scenario of rising growth and falling inflation expectations, ideal for markets.