Stock markets and the dollar remained cautiously higher on Wednesday as investors assessed vague but optimistic headlines from U.S.-China trade talks.

U.S.-China Reach Broad Trade Framework

Negotiators from both countries said they had agreed on a framework deal, with U.S. Commerce Secretary Howard Lutnick confirming:

• Restrictions on rare earth exports from China are “resolved.”

• The framework adds “meat on the bones” of earlier Geneva agreements.

• But final approval still rests with Trump and Xi Jinping.

Despite the headlines, details remain scant, and markets are aware this could be more symbolic than structural.

📉 “A comprehensive deal usually takes years. I'm skeptical this will change much in the near term.”
— Carol Kong, CBA Currency Strategist

Tariff Legal Ruling Raises Questions

Separately, a federal appeals court allowed Trump's sweeping tariffs to remain active—despite an earlier trade court ruling that tried to block them.

• This legal green light maintains one of Trump's most aggressive economic policies.

• Small businesses had sued, citing damage from what they called an unjustified emergency declaration.

Inflation Data: The Next Big Test

Markets are now focused on incoming U.S. CPI data, expected to show:

• Whether tariffs are pushing consumer prices higher.

• Early signs of import-led inflation from trade disruptions.

• Implications for Federal Reserve policy, especially after Friday's strong jobs report.

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Treasury Auction, Dollar Reaction

• The U.S. dollar held firm, supported by the trade optimism and inflation hedging.

• Bond yields were flat as investors waited for demand signals from an upcoming Treasury auction.

What It Means for Markets

Investors are cautiously optimistic but want:

• Concrete implementation steps from the trade framework.

• Inflation data to confirm or challenge tariff pass-through risks.

• A clearer Fed path before rotating into more risk-heavy positions.

Until then, most asset classes may stay in a holding pattern.