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Trump speaks in NYC – What to know in markets Tuesday

Public remarks from President Donald Trump will be a focus on Tuesday, with the comments poised to be potentially market-moving as stocks (^GSPC) hover near record highs and the Treasury yield curve (^TNX) steepens.

Trump is scheduled to speak at the Economic Club of New York during a luncheon Monday at 12 p.m. ET. Wall Street broadly expects Trump will use the speech to tout the strength of the U.S. economy, with the unemployment rate near a 50-year low and the most recent print on U.S. gross domestic product topping expectations.

The podium may also offer another forum for Trump to discuss U.S.-China trade affairs, after last week’s developments whipsawed markets with conflicting messages over whether tariffs would be deescalated as part of a phase one deal.

“Given investors’ intense focus on the prospects for a trade war truce with China, Trump’s appearance at the New York Economic Club on Tuesday could be the main event this week,” Brett Ryan, Deutsche Bank senior U.S. economist, wrote in a note Friday.

President Donald J. Trump holding up his hands during his address of the crowd for the opening ceremony of the100th annual Veterans Day Parade. The Presidential Address was held in Madison Square Park in the Manhattan borough of New York on November 11, 2019, USA. (Photo by Ira L. Black/Corbis via Getty Images)

While Trump has repeatedly touted progress toward a partial trade agreement with China, he has rebuffed reports that an early agreement would necessarily include a roll-back of tariffs already in place. A hardline stance on keeping existing tariffs could jeopardize momentum in trade deal negotiations, with Beijing having repeatedly called for a removal of punitive duties as a contingency for a deal.

Last week, members of the administration including economic adviser Larry Kudlow, had said, “there are going to be tariff agreements and concessions” as part of a preliminary deal,” with these comments helping to pump risk assets higher.

Trump himself, however, has been decidedly more hawkish in subsequent remarks, telling reporters on two separate occasions Friday and Saturday that he hadn’t agreed to lift tariffs yet, and that previous reports suggesting tariffs would be removed were incorrect.

Trump has also reiterated that he believes China wants a deal “much more than I do,” given signs of a stalling Chinese economy as the trade war rages on.

Reports last week suggested an interim trade deal with China would likely not be finalized until December, as both sides work to come to a consensus on the terms of the deal and a venue to serve as a backdrop for its signing. A November summit in Chile previously intended to serve as the the site for a meeting between Trump and China’s Xi Jinping was canceled.

In his speech Tuesday, Trump may also shed light on other trade-related matters. His remarks in New York come a day before the 180-day postponement on the decision of whether or not to impose tariffs per the Section 232 auto investigation expires.

Back in May, the White House was given six months – or until November 13 – to decide whether to apply duties on automobile and auto parts imports. This was in response to a Commerce Department report underscoring national security risks related to vehicle imports, giving Trump a legal basis to impose tariffs on goods from trading partners including the European Union.

European Commission President Jean-Claude Juncker said he did not believe Trump would go forward with the new tariffs, according to a translation of his interview with German publication Süddeutsche Zeitung published Friday. And while the White House still has until Wednesday to make its official call, Commerce Secretary Wilbur Ross had told Bloomberg earlier this month that the administration may not need to impose tariffs on foreign autos after having “good conversations” with carmakers in the EU and Japan.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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