The biggest geopolitical question right now is the ongoing game of chicken between the US and China on trade. While the US administration initially believed that China would blink first, we are now seeing early signs that Washington may be softening its stance.

We are getting diverging signals from both sides, to say the least. The US claims negotiations are ongoing, while China denies it. (In reality, they are clearly in contact—the question is at what level of engagement.) Notably, Chinese state sources now suggest that retailers like Walmart have asked major Chinese counterparts to resume shipping—likely in anticipation that tariffs will be much lower by the time goods arrive in the US 40–45 days from now.

We consider the chart below to be the single most important in global macro right now. It shows daily container volume leaving China for the US. We’re beginning to see early signs of a recovery, which could validate those Chinese state reports. Retailers such as Walmart may indeed be ramping up orders in anticipation of a dialing back of tariffs. 

After all, even Scott Bessent concedes that current trade levels are unsustainable. And when it comes to commodities, they may very well disconnect from bond yield–sensitive risk assets like the Nasdaq and Bitcoin in such an environment, as physical markets always tend to lag the forward-looking part of the cycle.

Chart 1: Early signs of a “dial back” on China tariffs