In this week’s global macro briefing from EXANTE, two seismic developments dominated the financial landscape: Donald Trump’s high-stakes visit to Beijing and the Senate’s razor-thin confirmation of Kevin Warsh as the new Federal Reserve chair, both carrying profound implications for markets, monetary policy, and geopolitical stability.
Trump touched down in Beijing on Wednesday for two days of meetings with Chinese premier Xi Jinping, the first visit to China by a sitting US president in nine years. Flanked by Tesla’s Elon Musk and Nvidia’s Jensen Huang, Trump pressed Xi to open China’s markets to corporate America. Talks are centring on a managed trade framework for non-sensitive goods, with both sides potentially identifying around $30bn in products where tariffs could be reduced without triggering national security concerns. US and Chinese economic teams had already met in South Korea ahead of the summit, with China’s foreign ministry describing outcomes as “overall balanced and positive.”
Yet the mood is far from settled. China continues to restrict exports of critical rare earth metals, while US courts have curtailed the Trump administration’s ability to impose tariffs unilaterally. Compounding pressure at home, the ongoing conflict with Iran has stoked inflation, eroding Trump’s approval ratings and raising the spectre of Republican losses in November’s midterm elections, EXANTE said.
Taiwan also loomed large. Xi cautioned that mishandling the island’s status could push the two nations toward open confrontation. Xinhua reported Xi as saying, “The Taiwan question is the most important issue in China-US relations. If mishandled, the two countries could face confrontation or even conflict, pushing the entire China-US relationship into a highly dangerous situation.” Analysts are watching closely whether Trump might soften arms sales to Taipei, particularly given that last year’s approved sales of $11.1bn to Taiwan already eclipsed the $8.4bn authorised under Biden, with a further package of at least $14bn in the pipeline.
Meanwhile, on the domestic monetary front, the Senate confirmed Kevin Warsh as Fed chair by a 54-45 vote, the narrowest margin in the role’s history, with only a single Democrat breaking ranks. Markets had hoped Warsh would deliver the rate cuts Trump has loudly demanded, but with April CPI hitting 3.8%, its highest since May 2023, and PPI surging to 6%, the highest since December 2022, that path looks firmly closed, EXANTE noted. Several policymakers including Susan Collins, Neel Kashkari and Beth Hammack have floated the possibility of rate increases, and five FOMC members dissented at April’s meeting in favour of more hawkish language. With unemployment holding at 4.3%, the labour market offers little justification for easing.
Read the full weekly briefing here.
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