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Morning Bid: U.S.-China framework underwhelms
Published by Global Banking & Finance Review®
Posted on June 11, 2025
7 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 11, 2025
7 min readLast updated: January 23, 2026
The U.S.-China trade talks produced a vague framework, leaving markets underwhelmed. Attention shifts to U.S. inflation and Treasury auctions.
By Mike Dolan
LONDON (Reuters) -What matters in U.S. and global markets today
I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.
After all the hype, this week's trade talks between the United States and China turned into something of a damp squib, producing a 'framework' for progress and little in the way of concrete details. Investor attention will now quickly switch to today's U.S. consumer price inflation report and two big auctions of long-term Treasury debt, including $39 billion of 10-year Treasury notes.
I'll discuss this and the rest of today's market news below. Plus, today's column explains why Italy's surprising bond market revival challenges its reputation as a debt outlier and what this means for the rest of the G7.
Today's Market Minute
* U.S. and Chinese officials said on Tuesday they had agreed on a framework to get their trade truce back on track and remove China's export restrictions on rare earths, while offering little sign of a durable resolution to longstanding trade tensions.
* Billionaire businessman Elon Musk said on Wednesday he regretted some of the posts he made last week about U.S. President Donald Trump as they had gone "too far".
* Several U.S. cities braced for protests on Wednesday against Trump's sweeping immigration raids, as parts of the country's second largest city Los Angeles spent the night under curfew in an effort to quell five days of unrest.
* Beijing's restrictions on rare earth exports have exposed the West's dependency on Chinese supplies of these esoteric metals and the magnets they help power. Part of the solution may be to simply use less of them, says ROI metals columnist Andy Home.
* Seismic shifts in immigration are distorting the U.S. employment picture, making it harder for investors and policymakers to know exactly how much the labor market is actually slowing. Find out more in the latest from ROI markets columnist Jamie McGeever.
U.S.-China framework underwhelms
U.S. markets were underwhelmed by the outcome of the U.S.-China talks, with stock futures slipping back into the red early Wednesday.
Chinese stocks, by contrast, took a more positive view of the London talks and advanced almost 1% to a three-week high. The CSI Rare Earth Index jumped nearly 4%, as Chinese rare earths magnet producer JL MAG Rare-Earth said it had obtained export licences to regions including the U.S., Europe and Southeast Asia for products including magnets, motor rotors and components.
There are currently few details available about the discussions between Washington and Beijing.
U.S. Commerce Secretary Howard Lutnick said the framework puts "meat on the bones" of a stalled agreement in Geneva last month, with the aim of removing restrictions on Chinese exports of rare earths and magnets and some of the recent U.S. export restrictions "in a balanced way".
But there was no additional information about the sky-high bilateral tariffs imposed - and paused - in recent months. Whatever agreements the two parties came to will now go back to their respective presidents for approval.
In the background, JPMorgan lifted its end-of-year forecast for China's onshore yuan, citing moderating risks around the trade war and a global theme of so-called de-dollarization.
The U.S. investment bank revised its dollar/yuan target to 7.15 from 7.30, seeing a "gentle downtrend" to 7.10 by mid-2026.
There was better news on the trade front back in the Americas. The United States and Mexico are negotiating a deal to reduce or eliminate Trump's 50% steel tariffs on imports up to a certain volume, industry sources said late Tuesday. That appeared to underscore the rise in Mexico's peso this week to its best level since August last year.
Meanwhile, MCSI's all-country stock index managed to eke out another small gain to hit a new record high, which is impressive given the latest world economic forecasts.
The World Bank slashed its global growth forecast for 2025 by 0.4 percentage point to 2.3%, saying that higher tariffs and heightened uncertainty posed a "significant headwind".
In its twice-yearly Global Economic Prospects report, the bank lowered its forecasts for nearly 70% of all economies, including the United States, China and Europe, as well as six emerging market regions.
While the World Bank stopped short of forecasting a recession, it said growth this year would be the weakest outside of a recession since 2008. It forecast that GDP growth would average just 2.5% by 2027, the slowest pace in any decade since the 1960s.
Speaking in Beijing, European Central Bank President Christine Lagarde said coercive trade policies will fail to resolve financial imbalances and that the risk of mutual damage is so great that all sides must weigh policy adjustments to resolve the tensions.
Nevertheless, over in the UK, the blue chip FTSE100 rose to within a whisker of record highs set in March as investors awaited UK finance minister Rachael Reeves' latest government spending review on Wednesday.
Reeves will allocate more than 2 trillion pounds ($2.7 trillion) of public spending to different departments, outlining the government's priorities for the coming year.
The FTSE was helped by sterling's swoon this week after softer data on wages and jobs raised expectations for at least two more Bank of England interest rate cuts this year. The pound remained on the backfoot on Wednesday, near its weakest level against the euro in a month.
Elsewhere, Tesla shares climbed more than 2% ahead of the bell after its billionaire owner Elon Musk said he regretted some of the posts he made last week about President Trump.
But domestic U.S. tensions simmered as several U.S. cities braced for protests against Trump's sweeping immigration raids.
On the economic front, U.S. consumer prices are likely to have increased moderately in May given the relatively low price of gasoline, but tariffs probably started filtering through to other goods, potentially spurring underlying inflation pressures.
Core CPI inflation is expected to have hit 0.3% last month, which would push up the annual core rate to 2.9% from 2.8% in April.
Make sure to check out today's column, which looks at the remarkable drop in Italy's bond market risk premium versus Germany's.
Chart of the day
China holds a near monopoly on rare earth magnets, a crucial component in electric vehicle motors, and its decision in April to suspend exports of a wide range of critical minerals and magnets upended global supply chains. In May, Washington responded by halting shipments of semiconductor design software and chemicals and aviation equipment, revoking export licences that had been previously issued. Two days of talks in London between the two biggest economies attempted to break this logjam.
Today's events to watch
* U.S. May consumer price report (8:30 AM EDT), US May Federal budget (2:00 PM EDT)
* UK finance minister Rachel Reeves to announce multi-year spending plan
* U.S. Treasury auctions $39 billion of 10-year notes
* U.S. corporate earnings: Oracle
* European Central Bank board member Piero Cipollone and Irish central bank chief Gabriel Makhlouf speak
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan; Editing by Anna Szymanski)
The trade talks resulted in a framework for progress but lacked concrete details, leaving markets underwhelmed.
U.S. markets were disappointed, with stock futures slipping, while Chinese stocks reacted positively, advancing nearly 1%.
JPMorgan revised its end-of-year forecast for the yuan to 7.15, citing moderating risks around the trade war.
The World Bank lowered its global growth forecast for 2025, indicating that higher tariffs and uncertainty are significant headwinds.
The framework aims to address China's restrictions on rare earth exports, highlighting the West's dependency on these critical materials.
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