US/China Trade Negotiations Continue

Jan 16, 2020

It's a big week for trade in the US, and Canada will be impacted on both fronts.

On Wednesday, the US and China signed the first phase of their new trade deal. The US still plans to keep the tariff war going for now, while phase 2 of the trade deal is worked out.

On the 2nd front, The US Senate is expected to vote today on the new NAFTA.

The expected vote promises sweeping bipartisan support for the legislation that will replace the original NAFTA. Most farm groups in Canada support the deal, but Canada's supply-managed dairy industry isn't as excited.

They're being forced to give up more market share to the US. The Trudeau government has been promising them billions in compensation for the loss of that market share.

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Video: U.S.-China Trade “Truce” + U.S. Fed Cuts Rates Again

The market was hoping for a US-China trade deal, but we got a trade “truce” for now from the keenly awaited Trump-Xi meeting at the APEC Summit.
China commits to minimum purchase commitments of 12 MMT of U.S. soybeans during the “current season” and a minimum of 25 MMT annually through 2028.
U.S. Treasury Sec Bessent said other Asian countries have agreed to buy additional 19 MMT of US soybean.
Soybean futures trading above $11 now- they normally tend to rally to $12.
As expected, US Fed cuts interest rates by -0.25% again in October to 3.75%–4.00%. No further cuts promised for this year but trade looking out to the Dec FOMC.
The Bank of Canada cut interest rates to 2.25% but raised concern over trade war damage.
Soy meal futures, remarkably, have had 14 consecutive higher close sessions. A bull market in soybeans is a bull market in soy meal!
Cattle futures lower as funds unwind out of cattle for now due to Trump headlines and objective to lower beef prices.
All major stock indices climb to new record highs. It was Mag 7 reporting week, which had mixed results. But we now have the first $5 trillion company in Nvidia!