Welcome back! Trade talks are once again dominating the news cycle (and market moves) this week. Casey has the latest on what’s at stake in London today for the second US-China meeting. 

Here goes:

Rare talks

Representatives from the US and China kicked off a second round of trade talks in London today at 1 pm local time. National Economic Council director Kevin Hassett told CNBC this morning it should be a “short meeting with a big strong handshake.” 

Here’s hoping. 

President Trump sent his top dogs: Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and trade representative Jamieson Greer. 

China’s delegation includes vice premier He Lifeng. 

It’s the second US-China meeting on neutral ground in less than a month. Roughly three weeks ago in Geneva, representatives from both countries negotiated a temporary truce: a 90-day pause on retaliatory tariffs from both sides. 

The amicability was short-lived, though, and it quickly became clear that the joint pause came with strings attached. 

On May 30, Trump accused China (via Truth Social) of violating its half of the agreement. Greer later clarified on CNBC that China was “slow rolling” its compliance to the Geneva deal, specifically when it came to rolling back rare earth export restrictions. 

Since April 4, (two days after “Liberation Day”) China has suspended almost all exports of several rare earth metals and magnets. This matters because China mines 60% of the global supply of rare earths and manufactures 90% of the global supply of the magnets. Rare earth elements are essential for technology; they’re in cell phones, cars, lights, batteries, you name it. 

The restrictions are poised to disrupt US supply chains because the US doesn’t currently have much infrastructure to mine the metals domestically. Solvent extraction (the difficult process of separating rare earth minerals from one another) comes with bad impacts on the environment: high levels of toxic waste, water pollution, etc. The process was actually created in the US in the 1950s, but it’s expensive and unpopular in the States. 

China said it implemented the export restrictions because rare earths have significant military applications. Trump and his administration have countered that China was actually retaliating against higher tariffs. 

China became less inclined to back off on the rare earth restrictions after the United States’ escalation of its AI chip export restrictions, according to a report from the WSJ. Trump’s crackdown on Chinese student visas surely didn’t help calm the waters, either. 

Over the weekend, though, things started looking up. China on Saturday loosened some of its export restrictions, although it did not specify which countries were impacted. 

Trump on Friday said he expected today’s London meeting to go “very well,” based on a phone call he had with Xi Jinping. 

The meeting also comes after a Chinese report released this morning showed that Chinese exports to the US were down 35% year over year last month. This is the largest annual decline since 2020.  

US markets were mostly muted Monday as investors waited for word from London. The S&P 500 and Nasdaq Composite indexes were up 0.3% and 0.5% over the day, respectively, at 2 pm ET. 

Given the general lack of progress (publicly, at least) on the “90 deals in 90 days” front, even the smallest bit of positive news from London today could be a huge catalyst for markets. Keep an eye on your inbox tomorrow for all the updates.

— Casey Wagner

Happy Monday! It’s shaping up to be another busy week with continuing trade talks and a new inflation report due Wednesday. Investors will also have an eye on Thursday’s initial jobless claims report and Friday’s consumer sentiment survey.

Here’s what we’re watching: 

• May’s consumer price index will be released Wednesday. Analysts expect the headline figure to show a 0.2% increase over the month, which would be in line with April’s figure. Year over year, the consensus estimate is 2.5% vs. 2.3% in April. Core CPI is projected to come in at 2.9% annually vs. 2.8% in April. This will be an important reading as a hotter-than-expected print will raise concerns about the Fed leaving interest rates higher for longer. The FOMC meets next week. 

• Weekly initial jobless claims will come out on Thursday. The number of first time filers is expected to tick down slightly to 242,000 for the week ended June 7, compared to 247,000 the week prior. This reading would be positive, especially after May’s employment report showed that while hiring is slowing down, companies are still adding more positions than analysts had predicted. 

• On Friday we’ll get the latest University of Michigan Consumer Sentiment survey. June’s reading is expected to come in a bit higher at 55 vs. 52.2 in May. May’s figure was upwardly revised after the preliminary reading came in at 50.8. The revision was due to late-May tariff policy revisions, survey directors said.

— Casey Wagner