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U.S.-China Trade Talks Boost Investor Optimism
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U.S.-China Trade Talks Boost Investor Optimism

Trade talks and PBOC easing refuel a risk-on trade

David Rosenberg's avatar
David Rosenberg
May 07, 2025
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Early Morning with Dave
Early Morning with Dave
U.S.-China Trade Talks Boost Investor Optimism
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Highlights

• Trade talks and PBOC easing refuel a risk-on trade

• Deteriorating fundamentals don’t justify the recent price momentum

• Ongoing rental deflation to make the Fed’s job easier

• There’s still more room for rates to fall in Canada

Key Takeaways

• China Talks & Liquidity Lift Risk-On Mood: The risk-on trade is showing a pulse again, on two events: the fact that senior trade officials in both the U.S. and China are now set to start official trade talks. Again, this is very much a case of much ado about nothing because keen students of this topic know that there is no quick fix to this elongated battle of cultures. The second boost came from the twin policy easing from the PBOC, which trimmed benchmark rates and eased reserve requirement ratios. In sum, a nearly +$140 billion liquidity boost.

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