US Treasury Secretary Scott Bessent told a Capitol Hill hearing on Tuesday that the US can have a very productive relationship with China. He said the US-China relationship is in a very comfortable place and that competition helps avoid stagnation.
He said the Trump administration sees a good partnership with Venezuela. He said this would eventually lead to free and fair elections.
Monetary Policy And Productivity Outlook
Bessent said the Federal Reserve, under Kevin Warsh’s leadership, would be watching for any timing mismatch. He also said that productivity booms tend to bring employment booms.
He said the US would see what happens with Iran. He added that he is optimistic about the Russia-Ukraine situation.
The positive commentary on US-China relations suggests a decrease in market volatility. With the VIX index hovering in the low teens, consistently below the averages we saw back in 2025, selling options to collect premium appears attractive. Traders could consider strategies like selling cash-secured puts on major indices.
We are seeing this optimism reflected in trade statistics, as two-way trade between the US and China grew by 4% in the final quarter of 2025. This environment is particularly beneficial for the semiconductor and technology sectors, which are highly sensitive to trade tensions. Call options on technology-focused ETFs could offer a way to capitalize on this stability.
Jobs Inflation And Risk Assets
The idea of a productivity boom leading to an employment boom seems to be materializing, with the January 2026 jobs report showing a robust addition of over 225,000 jobs. With core inflation holding steady at 2.9%, the Fed is not under immediate pressure to act, which further supports risk assets. This backdrop makes long-dated equity index futures a logical position for the coming weeks.
A potential partnership with Venezuela could introduce more oil supply to the global market, putting downward pressure on prices. West Texas Intermediate crude has already dipped below $80 per barrel, a level we haven’t seen since last fall. Traders might look at buying put options on oil futures to position for further price weakness.
However, the lingering uncertainty around Iran creates a need for a hedge against a sudden spike in energy prices. This suggests that while the primary trade may be bearish on oil, holding some cheap, out-of-the-money call options on energy stocks is a prudent way to protect against unforeseen events. The optimistic view on the Russia-Ukraine situation further reinforces a “risk-on” sentiment for European markets.
