Substantial progress was made in yesterday's high-level China-U.S. economic and trade talks, significantly reducing bilateral tariff levels. As a result, the three major U.S. stock indices recorded their largest daily gains in a month. Global trade tensions eased, expectations of economic recession softened, and risk aversion sharply decreased.

Against the backdrop of reduced tariffs between China and the U.S., the market expects that the U.S. will continue to follow up on tariff negotiations with other countries, accordingly reducing bets on the Federal Reserve's interest rate cuts, U.S. bonds were sold off, and the dollar surged above 101 in a single day.

Affected by the news from the China-U.S. economic and trade talks, Bitcoin and Ethereum surged after the news was released yesterday afternoon, and market optimism continues to rise.

From evening to early morning, the Hangqin reached the oversold zone, leading to profit-taking by major funds, aggressively selling, causing significant declines in Bitcoin and Ethereum. The market's main focus shifted, with BTC down 2.92% and ETH down 2.38% in the last 24 hours.

The greed sentiment in the crypto market remains steady at a high level of 70, influenced by tariff negotiations.

Today's news highlights

1. ① U.S. Treasury Secretary: Will study how to address non-tariff barriers;

② Trump signed an executive order to lower drug prices and issued a threat of auto tariffs against countries that do not reduce prices;

③ U.S. April tariff revenue surged 130% year-on-year to 16 billion dollars.

2. Federal Reserve Governor Cook supports keeping interest rates unchanged at current levels, still believes tariffs will have a significant impact.

3. Trump's 'grand tax cut plan' announced: proposes a tax cut of 4 trillion over ten years, raises the debt ceiling by 4 trillion, does not mention the proposal to tax millionaires.

CICC research report points out that if tariffs are further reduced, the Federal Reserve may cut interest rates in the third and fourth quarters of this year to relieve growth pressure. Currently, U.S. economic data performs strongly, the Federal Reserve lacks reasons for preemptive action, and with Powell's term ending in May next year, the risk of preemptive adjustments is high, so it is more likely to take a wait-and-see attitude rather than act proactively.

After China and the U.S. agreed to reduce tariffs and ease trade tensions, traders reduced their bets on interest rate cuts by the Federal Reserve this year, only setting the interest rate cut for 2025 to two times.

Morgan Stanley Wilson stated that the easing of tariff pressures opens up space for the Federal Reserve to cut interest rates, policies may lean towards stimulating the economy, the weakening dollar and the advancement of China-U.S. negotiations reduce recession risks and improve corporate profit expectations, performance in the second half of the year may exceed expectations.

Apollo Slok pointed out that the agreement eliminates 'significant tail risks,' the confidence in the U.S. economy may rebound and create new momentum, the market focuses on the inflation effect of tariffs, traders have reduced their expectations for interest rate cuts, but investors believe that improvements in growth can offset inflation.

Evercore's Altman reminds the market to remain calm, stating that the agreement is a phased achievement, the '90-day tariff suspension order' is merely to buy time for negotiations, and there are still thorny issues between China and the U.S. that need to be reconciled, and the overall tariff rate in the U.S. will still rise to about 14%, and the side effects of tariffs still exist.

Since the last Federal Reserve meeting's policy statement and Chair Powell's advocacy for a wait-and-see approach to assess how tariffs will impact inflation and economic growth, market expectations for the Federal Reserve's interest rate cuts have continued to decline.

The China-U.S. trade agreement boosted market confidence on Monday, but progress on tariff issues has not completely eliminated risks to the U.S. economy and stock market. Investors have relaxed after weeks of tense observation, but opinions on Wall Street leaders are mixed: while optimistic about the improvement in the U.S. economic outlook, they remain cautious of potential market risks.

CPI-related information:

The U.S. April non-seasonally adjusted CPI data released on May 13 at 20:30 shows that the market expects the CPI annual rate to be 2.40%, the previous value was 2.40%;

The expected CPI monthly rate is 0.30%, the previous value was -0.10%; the expected core CPI annual rate is 2.80%, the previous value was 2.80%;

The expected core CPI monthly rate is 0.30%, the previous value was 0.10%;

Consumers have felt the pressure of Trump's trade war, although the full impact of tariffs on prices will take months to materialize.

Housing costs are a key factor; if the trend of cooling inflation continues until April, it will help reduce the inflation rate.

Goldman Sachs predicts the effects of tariff increases will manifest within three months and continue until the end of the year. Some analysts believe that the April CPI may clearly reflect the impact of the trade war for the first time.

The subsequent impact of tariffs on the economy, inflation, and trade depends on the levels, duration, and scope implemented after negotiations.

Today's focus

20:30 U.S. April non-seasonally adjusted CPI annual rate

At 23:00, Bank of England Governor Bailey will deliver a speech.

Yumi believes that Bitcoin's long-term prospects are still good, but concerns over tariff negotiations and the pressure of interest rate cuts from the Federal Reserve will affect price trends in the short term. This week's data report may lead to significant fluctuations in Bitcoin, so pay attention to news and the flow of institutional and large funds.

Currently, the Hangqin has formed a short-term fluctuation below the midline of the Bollinger Bands, Yumi's short-term Silk Road focuses on high kongs, with resistance at 104000/2580 above and support at 100000/2350, pay attention to the change in the signal.

In the evening, pay attention to the actual data of the U.S. April CPI and the differences from expectations. If U.S. inflation performs higher than expected, it may further suppress expectations for Federal Reserve interest rate cuts, boost the dollar's performance, and suppress Bitcoin. If U.S. inflation unexpectedly cools, Bitcoin may welcome a warming opportunity.#CPI数据来袭 #加密圆桌会议要点 #贸易战缓和 #Strategy增持比特币