The high-stakes summit between President Donald Trump and Chinese President Xi Jinping in Beijing takes center stage, as the two superpowers navigate flashpoints over AI, tariffs, and the reopening of the Strait of Hormuz. U.S. Treasury Secretary Scott Bessent confirmed plans for a joint AI safety protocol, while reports indicate the U.S. has cleared the sale of Nvidia H200 chips to major Chinese tech firms to maintain leverage.
The escalating conflict with Iran and the resulting blockade of the Strait of Hormuz drove oil prices past $100 a barrel, sending massive inflationary shockwaves through the macroeconomic landscape. This energy-driven supply shock fueled a hotter-than-expected April CPI of 3.8% and a blazing 6% wholesale inflation print, forcing traders to abandon rate cut hopes and price in a 51% probability of a Federal Reserve rate hike by December. As incoming Fed Chair Kevin Warsh takes the helm following a tight Senate confirmation, the central bank faces a perilous balancing act between sticky inflation, rising Treasury yields, and severe geopolitical instability.