US/China tariff progess leads to possible trend reversals
May 12, 2025
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–Agreement between US and China to slash tariffs for 90 days has stocks jumping, dollar firming, gold getting pounded. The attached chart (doesn’t include today) shows strong related trends since January: curve (red/gold sofr spread) steepening, gold running higher, dollar weakening (DXY inverted on chart). Do those trends now have a chance to reverse, or will this just be a pullback?
–SFRU5 settled 9605.5 (3.945%) and Z5 at 9633.0 (3.67%). This morning U5 is 9598 or just above 4% and Z5 is 9622.5. So September has approx one ease priced and December two. The 30y yield is just over 4.85%, up a couple of bps. April’s high was 4.904% and the January high was just under 5% at 4.977%. Trendline off those two levels is 4.88 to 4.89.
–NFBI Small Business Confidence tomorrow morning, followed by CPI.
