China-U.S. Trade Ceasefire Offers A Welcome Boost To The Outlook

2025-05-12 08:15:00 ET

Summary

• A 90-day ceasefire was agreed upon after China-US trade talks in Switzerland, with the US dropping tariffs on China to 30% and China dropping tariffs on the US to 10%.
• This was a larger-than-expected de-escalation and represents an upgrade to the outlook, though the negotiation process will likely remain challenging.
• A positive move in EUR credit with low beta tightening by 2-3bp already this morning, and high beta up to 10bp tightening.

By Lynn Song , Chris Turner , Michiel Tukker and Timothy Rahill

Trade war de-escalation is a win-win as parties bring tariffs back to pre-Liberation Day levels

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