Tuesday the President mentioned he will be “very nice” to China during any trade talks and that tariffs will come down with any trade deal the two nations agree to.  “It [tariffs] will come down substantially, but it won’t be zero,” Trump offered from Washington. This is a sign he is softening his tone and possibly his position on Beijing. The President assured he would not bring up Covid-19 which can be a sensitive issue for Chinese leaders.  The 145% levies on Chinese imports remain, apart from the exceptions for computers and other popular electronics. 
Guo Jiakun, the Chinese Foreign Ministry spokesman, mentioned the “door is wide open” during a press briefing on Wednesday. Trump has tried to speak with the Chinese leader Xi Jinping several times, but his counterpart prefers to wait until the outlines of an agreement have been drawn. Chinese leaders noted earlier this month they want to see several steps from the U.S. administration before agreeing to any conversations. 
U.S. Treasury Secretary Scott Bessent spoke at the Institute of International Finance this week and told the audience the world’s two largest economies will need to de-escalate, hopefully in the near future. He went on to state that the US’s aim is not to completely decouple from its largest importing partner. However, he sees a comprehensive deal taking up to two or three years to iron out. 
Another big shift in tone came Tuesday evening when the U.S President clarified that he has no intention of firing Jerome Powell and that he “never did.” Trump told reporters that he “would like to see him [Powell] be a little more active in terms of his idea to lower interest rates.” Previously on Friday, Trump’s National Economic Council Director Kevin Hassett said the administration was studying the possibility of firing the Fed Chair. Yields on U.S. treasuries skyrocketed while the U.S. dollar dropped; an unusual occurrence as the two assets are highly correlated. This disconnect portended an aversion to U.S. assets. Yields briefly regained their Friday levels before rocketing up again Wednesday while the U.S. dollar regained its Friday level and more.
Members of the FOMC have spoken recently in support of the current benchmark interest rate level, reiterating the need to continue fighting inflation which has been above their 2% target for 4 years now.

Two-year treasury futures (/ZT) have fallen back into the consolidation zone between 103’11 and 103’25 after returning from the surge and subsequent fall following Liberation Day. This consolidation is confirmed with the RSI sitting near the 50% level. Yesterday’s long top-wick indicates short-term momentum is downward, aligning with the RSI closing below its 9-day moving average. 
First level of support is found near the 50-day moving average around 103’15. If that breaks, the next support is found at the bottom of the consolidation zone at 103’11. A turn back upward will need to break resistance at 103’27 to form the beginning of an uptrend.

Initial & Continuing Claims 8:30 AM ET

Durable Orders 8:30 AM ET

EIA Natural Gas Inventories 10:30 AM ET 

Existing Home Sales 10:00 AM ET