Trade Tensions, Treasury Moves, and Rate Cut Expectations

• Despite China’s tariff hike on Friday, markets barely reacted, with focus shifting to Trump’s announcement of exemptions for certain electronic goods. However, uncertainty grew as Trump denied any tariff “exception” for Chinese-produced electronics.
• On Friday, Wall Street’s main indices ended higher, despite China’s increased tariffs on U.S. imports to 125%, escalating the trade war between the two largest economies.
• The U.S. 10-year Treasury saw a sharp rise from 3.80% to 4.50% in just a week, reflecting growing concerns over inflation and the potential for tighter U.S. monetary policy.
• This week, markets will watch for any follow-up announcements from the White House, along with key inflation data from the U.S. and China.
• Despite global uncertainty, the market continues to price in four rate cuts by the RBA this year.