Stocks opened lower today after China hardened its stance going into trade talks, which are set to start later in Washington. China has threatened to retaliate if the President pushes through on tariff increases. The Chinese government has taken President Trumps pressure on the Fed to cut rates as sign that he doesn’t believe in the strength of the U.S. economy and that the economy is more fragile than he publicly claims. The trade uncertainty has created volatility all week and will continue as headlines are released.
Bond prices are up, and the 10-year treasury is yielding 2.43%. As trade tensions continue to increase, investors sought safety in government bonds, pushing up their prices and lowering their yields. The U.S. 10-year is at its lowest level since the end of March.
U.S. trade gap with china shrank in March to its lowest level since 2016 as imports slowed and exports advanced, giving President Trump leverage heading into a critical stage of the trade negotiations. Overall exports increased 1% boosted by a 39% increase in soybean shipments. Imports jumped 1.1% on gains in oil, food, vehicles and pharmaceuticals. The Commerce Department report showed the overall U.S. deficit is goods and services widened to $50 billion.