Oil settles lower as hopes dim for US-China trade and supply worries ease

NEW YORK – Oil prices fell by more than USD 1 a barrel on Wednesday as investors doubted that upcoming US-China trade talks would result in a breakthrough, while hopes for an Iran-US nuclear deal eased supply worries.

Brent crude futures settled USD 1.03, or 1.66%, lower at USD 61.12 a barrel while US West Texas Intermediate crude lost USD 1.02, or 1.73%, lower at USD 58.07 a barrel.

The US and China are due to meet in Switzerland, which could be the first step toward resolving a trade war disrupting the global economy.

The trade talks between the world’s two largest economies come after weeks of escalating tensions. Duties on goods imports between the countries have soared well beyond 100%.

“While the meeting may signal a thaw, expectations for a breakthrough remain low,” said Thiago Duarte, market analyst at Axi. “Unless the US receives major trade concessions, further de-escalation seems unlikely,” he said.

Asked about the upcoming trade meeting with Chinese officials, US Treasury Secretary Scott Bessent described the talks as “the opposite of advanced.”

US Vice President JD Vance described Washington’s talks with Iran as “so far, so good” and said there was a deal to be made that would reintegrate Iran into the global economy while preventing it from getting a nuclear weapon.

“There is a possibility that the US could be lifting the sanctions on Iranian oil, which right now is under maximum pressure,” said Phil Flynn, senior analyst with Price Futures Group.

The US had threatened secondary sanctions on Iran after a fourth round of talks were postponed between Washington and the OPEC member with production of more than 3 million barrels per day, or about 3% of global output.

The Federal Reserve held interest rates steady but said the risks of higher inflation and unemployment had risen, further clouding the economic outlook as the US central bank grapples with the impact Trump’s tariff policies.

Both benchmarks were pressured by data from the Energy Information Administration (EIA) showing gasoline inventories in the US rose unexpectedly last week, raising concerns of weak demand ahead of US summer driving season.

“This is the first bad report for gasoline in a couple of weeks. The refiner had been cranking up the utilization rate. But today in this report it went backwards,” said Bob Yawger, director of energy futures at Mizuho.

However, US crude inventories fell by 2 million barrels to 438.4 million barrels in the week, compared with analysts’ expectations in a Reuters poll for an 833,000-barrel draw.

Limiting the losses, some US producers have signaled they would cut spending, cautioning the country’s oil output may have peaked.

Additionally, conflict in the Middle East between Israel and the Houthis increases the geopolitical risk premium, said Tamas Varga, an analyst at PVM.

Volatility is expected to persist on quicker-than-expected OPEC+ supply, while US policymaking remains unpredictable, he added.

(Reporting by Nicole Jao in New York, Seher Dareen in London, and Jeslyn Lerh in Singapore; Editing by Kate Mayberry, Saad Sayeed, Alex Lawler, Ros Russell, Ed Osmond, Louise Heavens, Jan Harvey, Diane Craft, and David Gregorio)

US yields dip as Fed flags economic risks, signals patience on rate moves

NEW YORK – US Treasury yields slipped on Wednesday after the Federal Reserve held interest rates steady, as expected, but noted that the risk of higher inflation and unemployment has increased.

Fed Chair Jerome Powell, in a press conference after the US central bank’s latest policy meeting, emphasized the high degree of uncertainty brought on by the Trump administration’s tariffs. As a result, the Fed cannot be pre-emptive when it comes to monetary policy, he said, and has to wait and see how things play out on the tariff front.

“It’s not a situation where we can be pre-emptive because we actually don’t know what the right response to the data will be until we see more data,” Powell said.

The benchmark 10-year yield fell to 4.275%, down 4.3 basis points (bps). US 30-year yields also dropped, down 4 bps to 4.773%.

On the front end of the curve, the two-year yield, which reflects interest rate expectations, was down by less than a basis point at 3.781%.

The Fed’s policy-setting Federal Open Market Committee kept the central bank’s benchmark interest rate steady in the 4.25%-4.50% range, but pointed to economic uncertainty amid mounting risks of elevated inflation and joblessness.

“The Committee is attentive to the risks to both sides of its dual mandate,” the FOMC said in its statement.

Ali Hassan, a portfolio manager at Thornburg Investment Management, said given the ongoing turmoil, the Fed’s reaction function – when and how deeply it responds – has been up for debate.

“The consensus is that the Fed is unlikely to make such a move without more evidence. How much pain the economy must suffer for the Fed to waive off the inflation risk and pivot to supporting economic growth” is not clear at the moment,” Hassan said.

“The Fed has claimed to be data-dependent, but in such a fast-moving situation, we’ll want to understand what soft and leading data they are weighing most in calibrating policy,” said Hassan, who thinks the central bank should cut rates at its meeting next month.

ONUS ON LABOR MARKET

The US Treasury yield curve flattened following the release of the Fed statement, with yields on the long end lower than those on the front end, suggesting the Fed is unlikely to ease at the next meeting in June.

The spread between two-year and 10-year yields narrowed to 49.4 bps on Wednesday, compared with 51 bps late on Tuesday. Typically under a Fed easing cycle, the curve steepens, with short-dated Treasury yields tied to rate cuts.

The benchmark federal funds futures market is pricing in more than a 70% chance that the Fed will resume its rate cuts at its July 29-30 policy meeting, according to LSEG calculations. It also sees about 82 bps of easing this year.

“Recent better-than-feared jobs data has supported the Fed’s on-hold stance, and the onus is on the labor market to weaken sufficiently to bring a resumption of its easing cycle,” Ashish Shah, chief investment officer of public investing at Goldman Sachs Asset Management in New York, said in emailed comments.

“Any weakening in the labor market, however, could take a number of months to become apparent and we see the odds skewed towards another ‘hold’ at next month’s meeting.”

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Will Dunham, Deepa Babington, and Paul Simao)

Gold drops over 1% on Powell’s cautious views, easing trade tensions

Gold prices extended losses on Wednesday, weighed by a stronger dollar and easing China-US trade tensions, while traders were left dissatisfied by Federal Reserve Chair Jerome Powell’s cautious remarks on the US economy.

Spot gold, which was already down more than 1% before the meeting, slipped further after Powell’s comments. It was down 1.8% to USD 3,368.42 an ounce by 03:32 ET (19:32 GMT), while US gold futures settled 0.9% lower at USD 3,391.9.

The US dollar gained 0.6% against a basket of major currencies, making bullion more expensive for non-dollar buyers.

The Federal Open Market Committee (FOMC) concluded its two-day policy meeting with a unanimous decision to leave interest rates unchanged at 4.25%-4.50%, where they’ve been since December.

“Uncertainty about the economic outlook has increased further,” the FOMC said in its post-meeting statement.

Federal Reserve Chair Jerome Powell reinforced that sentiment, saying the central bank cannot act pre-emptively when the path forward is unclear.

“Powell held his cards very close repeating the message of the Fed will ‘wait and see’ and that it cannot be pre-emptive. It leaves the market a little dissatisfied, which will do nothing to change gold’s strong bullish bias,” said Tai Wong, an independent metals trader.

“Dips will be bought as gold is the one market where investors are highly confident,” he added.

Gold, seen as a safe haven asset in uncertain times, has surged 28.6% this year, amid geopolitical risks and strong central bank buying. China’s central bank added to reserves for a sixth straight month in April.

“I think a big part of (gold’s fall) is China and the US coming together for tariff talks. The Fed announcement just seems really neutral from what Powell’s saying right now… So there’s no surprises there,” Daniel Pavilonis, senior market strategist at RJO Futures said.

US Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer are scheduled to meet Chinese economic tsar He Lifeng in Switzerland this weekend, a move seen as a potential breakthrough in resolving trade tensions.

Elsewhere, spot silver dropped 2.9% to USD 32.27, while platinum fell 0.9% to USD 975.60 and palladium was down 1.2% at USD 963.34 per ounce.

(Reporting by Sherin Elizabeth Varghese and Anjana Anil in Bengaluru; Editing by Leroy Leo)

Growth woes to erode emerging market FX gains in coming months

BENGALURU/JOHANNESBURG – Emerging market currencies are poised to shed some of their recent gains over the next three months as mounting economic gloom drives investors out of riskier assets, even with the US dollar holding steady, a Reuters poll showed.

Fueled by a weaker dollar and a temporary easing in trade tensions, the broader emerging market currency index has climbed roughly 5% in 2025, marking a dramatic rebound from last year’s slump.

But that rally is likely finished as recession fears intensify with US tariff shockwaves threatening to ripple across economies, amplifying uncertainty and weighing heavily on sentiment across developing markets.

Almost all EM currencies covered in the April 30–May 6 poll of over 50 strategists are expected to give back at least part of their recent gains over the next three months, with a few projected to erase them entirely.

The broader foreign exchange poll indicated the greenback is likely to stay flat in the near term against major currencies.

“EM assets face growing risks from slowing global growth. Global growth forecasts have been revised sharply lower, and tariffs threaten to add more pain, as reflected in recent IMF forecasts,” said Mitul Kotecha, head of FX & EM macro strategy Asia at Barclays.

“We also maintain our view of gradual CNY depreciation due to the impact of tariffs, ongoing deflationary pressures, weak growth, and capital account pressures, which may act as a drag on other Asian currencies, contributing to our view of expected underperformance of Asian FX versus other EM regions.”

In a separate poll, most economists warned the global economy risks sliding into recession this year, with many citing US President Donald Trump’s tariffs as a major blow to business sentiment.

The Chinese yuan, Indian rupee, and South African rand are expected to pare gains made over the past four months and lose around 1.0%-3.0% in three months.

Expectations for the yuan to give up all its year-to-date gains likely stem from the potential expiration of the tariff reprieve in July amid ongoing growth challenges in China.

The Korean won, Thai baht, and Turkish lira are expected to weaken around 4.0% by end-July.

In the same time period the Brazilian real, which has gained more than 8% this year, is forecast to drop around 1%. The Mexican peso is predicted to fall about 2.5%.

“The hit to investor confidence coming from other spheres of US policy-making might also trigger waves of risk aversion, leaving EM FX vulnerable for the time being,” noted Anezka Christovova at J.P. Morgan.

(Reporting by Devayani Sathyan and Vuyani Nbada; Polling by Jaiganesh Mahesh, Indradip Ghosh, Veronica Khongwir, and Vijayalakshmi Srinivasan; Editing by Alexandra Hudson)

US futures bounce on China trade talks

SINGAPORE – US stock futures bounced and Asian currencies rose on Wednesday, as investors welcomed news of a meeting between top US and Chinese trade officials, set for the weekend in Switzerland, as a chance to tone down the trade war.

“My sense is this will be about de-escalation,” US Treasury Secretary Scott Bessent said on Fox News.

S&P 500 futures ESc1 rose about 0.9%, recouping what had been a fall in the cash session when US President Donald Trump had seemed to strike a more confrontational tone.

Stock markets in Japan and Australia edged higher.

The dollar rose a little bit on the yen but fell on other Asian currencies, with the offshore yuan creeping close to a six-month high and the Australian dollar at a five-month high and just above 65 US cents.

“It suggests that there is perhaps a willingness and enthusiasm on both sides to meet at a high level, so it can’t be anything but positive I would have thought,” said National Australia Bank’s head of foreign exchange research Ray Attrill.

“It’s ostensibly positive for Asian FX generally.”

Asian currencies, led by a flying Taiwan dollar, have surged on the greenback lately on speculation that a weaker dollar is part of Trump’s trade agenda and as big investors cut large dollar positions built over years of buying US assets.

Gold fell 1% and oil was about 1% higher. Benchmark 10-year Treasury yields were steady at 4.3238%.

The US Federal Reserve meets to set interest rates later on Wednesday, with expectations for cuts being dialled down.

Markets imply nearly no chance of a move on Wednesday and only a 33% chance of a cut in June, down from 64% a month ago.

The heaviest fighting in more than two decades has erupted between nuclear-armed neighbours India and Pakistan, with shelling and gunfire over the frontier in Kashmir and India striking targets inside Pakistan.

“It adds another layer to geopolitical tensions,” said NAB’s Attrill, and would likely push down on India’s rupee.

The euro EUR=EBS had support above USD 1.13 with German conservative leader Friedrich Merz elected chancellor in a second round of voting after his alliance with the Social Democrats was dealt a surprise defeat in the first attempt.

(Reporting by Tom Westbrook; Editing by Shri Navaratnam)

Gold slips on US-China trade talk hopes; traders eye Fed policy

Gold prices fell on Wednesday as optimism over potential US-China trade talks weakened demand for safe-haven assets, while investors braced for the Federal Reserve’s policy meeting later in the day.

FUNDAMENTALS

* Spot gold lost 1.3% to USD 3,386.36 an ounce as of 0024 GMT. The metal had risen nearly 3% in the previous session.

* US gold futures fell 0.8% to USD 3,395.20.

* US Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China’s top economic official in Switzerland this week, US officials said, in what could be the first step toward resolving a trade war disrupting the global economy.

* The US and China imposed tit-for-tat tariffs on each other last month, triggering a trade war that fuelled fears of a global recession.

* On Tuesday, US President Donald Trump said he and top administration officials will review potential trade deals over the next two weeks to decide which ones to accept.

* The market’s focus will be on the Federal Open Market Committee (FOMC) meeting later in the day, where the US central bank is expected to hold interest rates steady. The Fed has held its policy rate in the 4.25%-4.50% range since last December.

* Fed Chair Jerome Powell’s remarks are awaited for clues into the potential timing of future interest rate cuts.

* Gold, traditionally seen as a hedge against economic and political uncertainties, thrives in a low-interest rate environment.

* Spot silver eased 0.6% to USD 33.03 an ounce, platinum fell 0.4% to USD 980.95, and palladium lost 0.5% to USD 969.75.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Sumana Nandy)

S&P 500 futures rise on trade deal optimism

US stock futures rose late on Tuesday after it was announced that Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer would meet with China’s top economic official later this week in Switzerland.

S&P 500 and Nasdaq futures were up about 1%, signaling that traders expect Wall Street to open higher on Wednesday morning, the latest sharp move in several weeks of uncertainty related to President Donald Trump’s global trade war.

The US Trade Representative’s office and Treasury said Greer and Bessent would travel together to Geneva on May 8 and would also meet with Swiss President Karin Ketter-Sutter to discuss negotiations over reciprocal trade.

In Tuesday’s trading session on Wall Street, the S&P 500 and Nasdaq lost ground
after comments from Trump provided little clarity about the timeline for any trade deals.

Stocks have been volatile since Trump announced his first round of tariffs on April 2, with the S&P 500 initially dropping nearly 15%, only to stabilize and briefly recover to levels from before the tariffs were announced.

(Reporting by Noel Randewich; Editing by Leslie Adler)

Gold gains on dollar weakness, safe-haven demand

Gold prices gained more than 2% on Monday, driven by a weaker dollar and safe-haven demand, while the market awaits a policy decision from the US Federal Reserve later in the week.

Spot gold was up 2.3% at USD 3,315.09 an ounce at 1:52 p.m. ET (1752 GMT).

US gold futures settled 2.4% higher at USD 3,322.3.

The dollar index fell 0.1%, making bullion less expensive for other currency holders.

US President Donald Trump announced on Sunday a 100% tariff on movies produced overseas, reigniting concerns about the potential fallout of a global trade war.

“We are seeing a continued flow of safe-haven demand, keeping gold prices elevated … prices are going to trade above USD 3,000 level at least in the near-term,” said Jim Wyckoff, senior analyst at Kitco Metals.

“I don’t think any change in interest rates is expected at this meeting, but we’ll be watching it to see if the Fed is leaning any particular way.”

Traders await Fed Chair Jerome Powell’s comments due on Wednesday to get clues on the central bank’s rate path. The Fed has held its policy rate in the 4.25%-4.50% range since December.

The Fed is expected to leave interest rates unchanged this meeting, but it may be the last where the outcome is so cut and dry with Trump’s tariffs casting a shadow of uncertainty over the economic outlook.

Gold, which is considered a hedge against uncertainty and tends to thrive in a low interest rate environment, has hit multiple record highs and gained over 26% so far this year.

Goldman Sachs expects gold to continue outperforming silver, but noted that, given the strong correlation in flows, renewed demand for gold in 2025 was likely to boost silver prices too.

Spot silver rose 1% to USD 32.31 an ounce.

Meanwhile, platinum fell 0.4% to USD 956.05 and palladium shed 1.5% to USD 939.55.

(Reporting by Sarah Qureshi and Ashitha Shivaprasad in Bengaluru; Editing by Shailesh Kuber)

Dollar slides against peers, weighed down by fresh tariff worries

NEW YORK – The US dollar weakened against major currencies, including the yen and the euro, on Monday as markets weighed continued uncertainty from President Donald Trump’s tariff policies and their impact on the economy.

The greenback slid to a fresh record low against the Taiwan dollar to 28.8150 amid speculation that Taiwan was letting its currency appreciate as part of a trade deal with the US, or at least was unwilling to intervene to stop it rising alongside sharp inflows in capital.

Other Asian-Pacific currencies, including the Australian dollar, gained against the US dollar. The Aussie reached as high as USD 0.64935, its highest since December last year.

The selloff of the dollar against Asian currencies is partly driven by the unwinding of large, un-hedged positions taken by some investors such as life insurance companies in Taiwan amid talk of more US tariffs, said Marc Chandler, chief market strategist at Bannockburn Global Forex.

“The dollar sold off in Asia partly because some people are worried there’d be semiconductor tariffs by the US to be announced as early as Wednesday and talk that in these bilateral trade talks the US could transfer currency appreciation in East Asia,” Chandler said.

Trump doubled down on tariff-driven policies during an interview on Sunday, reiterating that the duties on US imports would eventually make Americans rich. He announced on Sunday a new 100% tariff on films made outside the US

Treasury Secretary Scott Bessent on Monday defended Trump’s tariffs, emphasizing that his broader agenda including tax cuts would eventually lead to long-term economic growth.

Markets have been affected by the fact that Trump is not leaving his stance that tariffs are important, said Juan Perez, director of trading at Monex USA in Washington.

The dollar was down 0.73% against the Japanese yen at 143.885. Against the Swiss franc, the dollar weakened 0.50% to 0.82255.

Trump said he would not attempt to remove Federal Reserve Chair Jerome Powell, but repeated calls for lower interest rates and called Powell a “stiff”. The Fed meets on Wednesday and is widely expected to leave rates steady following a solid March payrolls report.

Perez said the US dollar was being hurt the most by chaos in the markets.

“I think we’re returning today to…this very sour mood and descent and this idea that overall you may not necessarily rely on American markets the way you used to. And that’s been seen across Treasuries.”

Markets now imply only a 37% chance of a Fed rate cut in June, down from 64% a month ago. Goldman Sachs and Barclays both shifted their cut calls to July from June.

The dollar trimmed its losses briefly against the yen after the Institute for Supply Management report for April showed a larger-than-expected pickup in growth in the US services sector, which accounts for two-thirds of the American economy.

Chinese onshore markets were closed but the yuan traded offshore hit its highest in almost six months at 7.1831 per dollar as investors wagered Beijing might let its currency strengthen as part of trade talks with Washington. The yuan was last up 0.12% to 7.2014 per dollar.

In Europe, the euro was up 0.15% at USD 1.131600 and the pound was up 0.21% at USD 1.32950.

The Bank of England will meet on Thursday and is widely expected to cut rates by a further 25 basis points to 4.25%. Central banks in Norway and Sweden also meet this week and are expected to keep rates steady.

(Reporting by Chibuike Oguh in New York, Wayne Cole, and Alun John. Editing by Sonali Paul, Mark Potter, Tomasz Janowski, Nia Williams, and Marguerita Choy)

US yields drift higher after stronger-than-expected services sector data

NEW YORK – US Treasury yields edged higher on Monday, after data showed that the services sector in the world’s largest economy remained resilient last month, with prices paid, an inflation gauge, hitting a two-year high.

Volume was lighter than usual, with financial markets closed in the UK, Japan, Hong Kong and mainland China.

Before the data, US yields were mixed with very little movement. The benchmark 10-year yield was last up 1.9 basis points (bps) at 4.339%. On the short end of the curve, the two-year yield was marginally higher at 3.843%. It was trading lower before the data.

The Institute for Supply Management (ISM) said on Monday its nonmanufacturing purchasing managers index (PMI) increased to 51.6 last month from 50.8 in March. Economists polled by Reuters had forecast the services PMI dipping to 50.2.

The survey’s measure of prices paid for services inputs jumped to 65.1, the highest reading since January 2023 and followed 60.9 in March.

“The increase in the prices-paid component in April doesn’t exactly line up with the featured survey responses, which indicate more uncertainty than actual price increases,” wrote Will Compernolle, macro strategist at FHN Financial in Chicago.

“Despite the uncertainty, the prices-paid component jumped, and is a solid leading indicator of CPI inflation. Bond yields rose in reaction to the ISM Services print partially due to the stronger-than-expected headline index, but also because higher prices paid means the Fed is more likely to remain on the sidelines for longer,” Compernolle wrote.

The US yield curve steepened following the data, with the spread between two-year and 10-year yields at 50 bps, compared with 48.4 bps late on Friday.

The current curve is described as a “bear steepener,” in which long-term interest rates are rising more quickly than those on the short end. This often happens when inflation expectations pick up. In the current easing cycle, the market is expecting the Federal Reserve to hold interest rates unchanged at the next few meetings and not cut them, as inflation firms.

“The question on bond investors’ minds is: are we going to see the tariff shock show up on hard data?,” said Stan Shipley, managing director and fixed income strategist at Evercore ISI. “We are now coming up to a period where higher tariffs are going to influence consumer prices in May and June. We’re getting closer to that.”

Outside of the ISM data impact, the market overall struggled for direction ahead of crucial auctions this week that could once again test demand for US government debt.

The US Treasury will auction USD 58 billion in three-year notes later on Monday, USD 42 billion in 10-year notes on Tuesday, and USD 25 billion in 30-year bonds on Thursday. Of the three auctions, investors are focused more on the US 10-year note sale as they remain on the lookout for signs of diminishing demand for Treasuries.

“Our expectations are that the (10-year) auction will be well sponsored by both domestic and overseas participants, as we maintain that it is still too early in the trade war to expect a meaningful rotation away from Treasuries as a reserve asset – at least not on the part of official money,” wrote Ian Lyngen, managing director and head of US rates strategy at BMO Capital in a research note.

Monday’s generally lackluster trading also comes ahead of a two-day monetary policy meeting at the Federal Reserve, which is expected to hold interest rates steady in the 4.25%-4.50% range. A solid US nonfarm payrolls report for April released last Friday also gave the Fed some breathing room to stay patient with interest rates.

The benchmark federal funds futures market has priced in a more than 70% chance that the US central bank will resume cutting rates at the July policy meeting, LSEG calculations showed. Overall, the market expects about 77 bps of easing this year.

In other maturities, US 30-year bond yields were up 2.6 bps at 4.822%.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Will Dunham)

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