Insights 
VT 
The ongoing negotiations between the United States and China have been put on hold. This pause has raised questions about Treasury Secretary Bessent’s upcoming testimony before Congress, which is scheduled for tomorrow.
These discussions are part of a series of talks aimed at addressing various economic and trade issues between the two countries. The outcome of these negotiations could have implications for global markets and economic relations.
Treasury Secretary Testimony Expectations
Bessent’s testimony is expected to address these recent developments and their potential impact. The delay in negotiations may affect the content and focus of the testimony as it was set to provide insights into the progress made and the challenges faced in the talks.
The situation remains fluid, with the pause in negotiations leaving uncertainties about when talks will resume and what decisions will be made moving forward. Observers are closely monitoring the situation to gauge its effects on both domestic and international economic policies.
With the talks on hold, the testimony expected from Bessent tomorrow may carry more weight than initially assumed. Rather than offering a straightforward update on progress, her remarks are more likely now to reflect on the limitations faced, the financial sensitivities involved, and perhaps offer a preview of what any resumption may require. It shifts the dynamic—this is no longer just an appearance before Congress, but a stage for managing expectations following an abrupt quiet.
Markets, so often forward-looking machines, are likely to read into the tone just as much as the content. Earnings reports have already started to factor in potential delays in cross-border supply improvements and regulatory alignment. We’ve noticed volatility in rates and currency pairs react not only to formal news releases but to rumblings and policy posture as well. A lack of clarity from Bessent tomorrow could be taken as a signal—that the economic relationship may enter a slower, more uncertain chapter.
Market Reactions and Strategy
From our vantage point, we’re treating trade-policy headlines as short-term catalysts, particularly in rate-sensitive derivatives. Restrictions on timing and position sizes have been tightened slightly. With benchmark spreads already pricing in partial outcomes, there is little safety in waiting for an announcement that may never come. It’s safer to assume posture now rather than rush at the last minute.
Traders inclined to hedge macro risk should be tactful about exposure to real yields and cross-currency basis where reaction to policy disappointment may be more immediate. Many are already tilting toward flatteners in anticipation of prolonged trade dissonance weighing on front-end sentiment. Flow patterns in interest rate swaps also suggest some reluctance to commit directionally, so relative value plays are likely to outperform directional trades over the next few sessions.
What happens next is tied not only to when the talks resume but also to how forcefully either side signals its intent. If Bessent offers even a narrow window into timelines or revised objectives, we expect spreads to respond—possibly sharply—given the current standstill. At this stage, anything that hints at resolution or deeper freeze will carry weight.
We’re maintaining tighter thresholds on risk-on positioning but are keeping liquidity available in case pricing skews too dramatically on fresh headlines. With Congress positioning itself as a forum for what may now be a public relitigation of trade aims, we cannot rely solely on traditional trade negotiation cycles or diplomatic signals. The agenda tomorrow will not be just about transparency. It will also set the tone for how much policy uncertainty markets need to absorb directly.
For now, it pays to remain nimble, responsive to second-order effects, and ready to capitalise on any mispricing driven by political theatrics rather than economic fundamentals.
