Investinglive Americas FX news wrap 29 Jul:US/China talks end. The ball is in Trumps court

Once again, there was a lot of trade news today. The big event was the end of the 2-day meeting with China trade negotiators.

Following a round of U.S.–China trade meetings, Treasury Secretary Bessent described the overall tone as “very constructive,” emphasizing that the United States does not seek to decouple from China but instead aims to rebalance the relationship. He stressed that China’s global trade imbalances are unsustainable, warning that other developed economies may raise tariff barriers and that the Global South cannot absorb China’s excess industrial production. Bessent underscored that national security remains a core priority, noting that U.S. secondary tariff legislation targeting sanctioned Russian oil could expose China to steep tariffs if it continues such purchases. He confirmed that the U.S. and Chinese sides are becoming more engaged in dialogue and revealed that President Xi recently invited President Trump to China in a phone call. Bessent is scheduled to meet with Trump in the Oval Office tomorrow to discuss the latest developments. Will Trump give China the free pass for an extention, or will he tighten the screws a bit after his recent victories. The ball is back in the Presidents court.

U.S. Trade Representative Greer added that the U.S. trade deficit with China is on track to shrink by at least $50 billion this year. He noted that President Trump retains the discretion to alter tariff rates on Chinese imports. On the issue of China purchasing Iranian oil, Greer acknowledged that Beijing invoked its sovereign rights and that the U.S. currently lacks direct leverage on that front. He suggested that external forces may be necessary to shift China’s economy toward more domestic consumption. Turning to the U.S.–EU trade deal and the $600 billion investment framework, Greer said the agreement will be closely monitored and that tariff rates could change if the EU fails to uphold its commitments. He anticipated that a large share of the investment would target defense and agriculture. Greer also downplayed concerns about sna

Earlier today, Commerce Secretary Lutnick could hardly control his joy when speaking about the EU/US trade deal (although perhaps he should be more humble – what goes around/comes around). Lutnick praised the recently completed EU trade agreement as a “masterclass” by President Trump, highlighting it as a pivotal achievement that grants the U.S. access to the $20 trillion European market. He noted that the EU committed to $750 million in U.S. energy purchases and agreed to a 15% tariff structure, describing this as a major win. The EU, which runs a $235 billion annual trade surplus with the U.S., now faces a choice: onshore production to the U.S. or face tariffs under the terms of the deal. Lutnick emphasized that autos and pharmaceuticals were key components of the agreement—stating that if companies want to sell in the U.S., they must produce in the U.S. He revealed that President Trump plans to roll out a new pharmaceutical policy reinforcing that requirement.

While calling the deal a strong foundation, Lutnick acknowledged that further “horse trading” remains, with digital services, steel, and aluminum still on the table for negotiation. He said Trump has accepted that natural resources will not face tariffs but stressed that for other nations, completely open markets are a necessity. According to Lutnick, Trump holds the leverage in future deals—he can set the terms or decline entirely. Regarding China, he said it is being treated as a separate negotiation, with progress expected and potential outcomes targeted by Friday.

In other news, both the monthly home prices from the FHFA, and the Case Shiller data show declines for the month is a bit of market softness enters from the overpriced why.

The US trade balance fell sharply to $85.99 billion from $96.42 billion last month. Imports fell sharply by $-11 billion contributing to the narrowing of the deficit.

Consumer confidence rose to 97.2 from 95.0, and the JOLTS job openings came in marginally lower than the expected numbers. The US jobs report will be released on Friday.

The final estimate of the Atlanta Fed GDP for Q2 was announced at 2.9% up from 2.4%. Tomorrow the advanced GDP data will be released. Economists have paid the number at 2.4% although the range of estimates is very wide (0.8% to 4.5%.).

Stocks took a breather today after record highs in the S&P and NASDAQ index yesterday and intraday new record highs today.

Dow industrial average which still hasn’t reached a record highs since December 2024, fell -0.46%
S&P index fell -0.30%
NASDAQ index fell -0.38%
Russell 2000 fell -0.61%.

US yields moved sharply lower. The U.S. Treasury auctioned off seven year notes with strong demand.

2-year yield 3.870%, -5.1 basis points
5-year yield 3.903%, -7.9 basis points
10 year yield 4.322%, – point basis points
30 year yield 4.859%, -10.5 basis points

In addition to the GDP data to be released at 8:30 AM ET, the other big event is the FOMC rate decision at 2 PM,. The Fed is directed to keep rates unchanged. Fed chair Powell is still concerned about inflation and the potential impact from tariffs on prices. I would expect that he would keep that same bias. However, there could be some dissenting members. The split Fed might therefore be the storyline

This article was written by Greg Michalowski at investinglive.com.