Dollar & Bond Yields Tumble On Reports "No Deal" Expected At G-20

In what appears to be an exercise in expectations management, White House officials are talking to Reuters to set the table for this weekend's meeting between Trump and Xi at the G-20.

The goal of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the June 28-29 G20 summit in Japan will be to restart trade talks and there was a pretty good chance that will happen, a senior administration official said on Tuesday.

It is possible that the United States and China could agree not to impose new tariffs as a goodwill gesture, but it is unclear if that will happen, the official said on customary condition of anonymity. Administration officials have said no broad trade deal is expected to be made at the meeting.

Additionally, Reuters notes that the official warned that talks could take months, years to complete.

Stocks shook off the news but bonds and the dollar did not...

We suspect the lack of drop in stocks reflects the downside risk that this would imply and thus brings back the 50bps-rate-cut scenario that Bullard and Powell have just jawboned away.