TL;DR

U.S.-China 90-day tariff truce lifts risk assets; oil rises, gold drops; China escalates Taiwan military activity.

Highlights

• U.S. and China agree to a 90-day tariff truce, cutting tariffs to 30% (U.S.) and 10% (China); deal is temporary and subject to reversal 1.
• U.S. Treasury Secretary Bessent outlines "strategic decoupling" from China in steel, semiconductors, and medicines, with some sector-specific tariffs to remain 15.
• Oil prices rise over 3% as U.S.-China trade détente lifts demand outlook; Brent and WTI both up more than 4% for the week 12.
• Gold drops as much as 3.2% to $3,220/oz; gold ETFs see outflows as safe-haven demand eases post-tariff deal 13.
• Japan’s 40-year bond yield hits 3.39% (20-year high); U.S. 10-year yield climbs to 4.45% on selling of haven assets 17.
• China increases military activity near Taiwan, sending 36 aircraft and 8 vessels, with 17 aircraft crossing the median line 6.
• PBOC launches a 500 billion yuan relending facility to boost consumption amid ongoing U.S. trade tensions 7.
• Russia proposes Istanbul peace talks with Ukraine; Zelensky demands a 30-day ceasefire first; EU allocates €1.9B from frozen Russian assets to Ukraine’s defense 28.
• UK to announce new Russia sanctions; European ministers meet in London on Ukraine security 193.
• India and Pakistan hold military talks after U.S.-brokered ceasefire in the Himalayan border region 5.
• BlackRock increases Bitcoin holdings above 625,000 BTC; Goldman Sachs and Metaplanet also expand crypto exposure 16.
• Spain considers a Sabadell-Abanca merger to counter BBVA ’s takeover bid; Spanish banking sector in focus 18.
• Pan American Silver to acquire MAG Silver for $2.1B, doubling reserves and boosting output 10.
• Norway’s $1.8T wealth fund divests from Israel’s Paz and Mexico’s Pemex over ethics concerns 11.
• Greece to repay first bailout loans 10 years early, signaling improved fiscal health 20.

Commentary

Markets are responding positively to the U.S.-China 90-day tariff truce, with risk assets rallying and safe havens under pressure 112. The sharp reduction in tariffs has provided immediate relief for global equities and commodities, notably lifting oil prices on improved demand prospects 12. However, the truce is explicitly temporary and could be reversed if negotiations fail, keeping headline risk elevated 1. The U.S. is simultaneously moving ahead with "strategic decoupling" in critical sectors, signaling that structural U.S.-China tensions will persist beyond the current reprieve 15.

Fixed income markets are adjusting to the risk-on shift, with yields on U.S. Treasuries and Japanese government bonds rising as investors rotate out of defensive positions 17. The move in long-dated Japanese bonds is particularly notable, reflecting both global and domestic factors 17. Gold’s decline and outflows from gold ETFs further underscore the rotation away from safe havens 13, while institutional flows into Bitcoin (notably from BlackRock and Goldman Sachs ) highlight ongoing diversification into alternative assets 16.

Geopolitical risk remains a key factor. China’s increased military activity near Taiwan 6 and ongoing Russia-Ukraine tensions (with new EU funding 8 and sanctions 19) are potential sources of volatility. The upcoming Istanbul meeting between Russia and Ukraine, contingent on a ceasefire 2, and the U.S.-brokered India-Pakistan ceasefire talks 5 are important to monitor for any escalation or breakthrough. In the Middle East, the release of a U.S.-Israeli hostage by Hamas is a positive step but does not yet signal a broader ceasefire 4.

Central bank policy and capital markets activity are also in focus. The PBOC’s new 500 billion yuan facility aims to support domestic consumption amid external headwinds 7. In Europe, the Spanish banking sector is active with Sabadell exploring a merger to fend off BBVA 18, while Greece’s early bailout repayment signals improving fiscal stability 20. Norway’s wealth fund divestments reflect ongoing ESG scrutiny impacting select equities and bonds 11.

Traders should monitor follow-through in risk assets, bond yield movements, and developments in U.S.-China talks, Taiwan Strait tensions, and Ukraine negotiations. M&A activity and central bank actions remain key for sector rotation and regional sentiment.