US producer prices surged 6.1% in April, well above the market’s 4.8% estimate, stoking fresh inflation concerns and complicating the outlook for central banks and markets.
Diplomatic theater in Beijing added to the market backdrop: President Xi Jinping met with President Trump and urged the two powers to pursue cooperation rather than confrontation, invoking the need to avoid a “Thucydides trap.” Xi warned of potentially catastrophic consequences from any confrontation over Taiwan, reiterating that the island remains a “big red line” for China. He also told the suite of CEOs accompanying Trump that Beijing would be more open to business, a signal aimed at calming corporate nerves amid geopolitical tensions.
Currency markets reacted to the thaw: the offshore yuan extended gains, closing at 6.78 per dollar — its strongest since February 2023 and marking its longest winning streak against the greenback in nearly a decade. Major banks, including Goldman Sachs, have turned bullish on the yuan, arguing the currency is as much as 20% undervalued against the dollar.
Market moves were mixed. European equities traded about 1% higher. In Asia, Hong Kong and Japan were flat while mainland Chinese markets lagged, down roughly 1.5%. US futures pointed to a marginally firmer open. Oil prices were steady, with Brent crude around $105 a barrel.
Investors will be parsing whether the PPI shock reflects persistent domestic price pressures or transitory supply‑side drivers, even as diplomatic overtures between Washington and Beijing offer a fragile offset to risk sentiment.
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