Insights 
VT 
The US-China trade talks, currently unfolding in London, are set to continue on Tuesday. The negotiations, described as fruitful by US Commerce Secretary Lutnick, will resume at 10 am local time.
President Trump indicated that the discussions are progressing well, stating he received favourable updates from his team in London. However, specific details regarding the content and outcomes of these talks remain undisclosed.
Complexity Of The Negotiations
Bloomberg reported that the talks have been extended to a second day. The ongoing negotiations underscore the complexity of reaching a comprehensive agreement between the two countries.
The ongoing discussions between high-level officials from both nations have now been extended, which tells us one thing very clearly: neither side deems the current impasse acceptable, nor are they prepared to walk away—not yet, at least. Lutnick’s optimistic characterisation of the talks points to movement, not necessarily a breakthrough, but enough give-and-take to justify further rounds. That the talks are taking place outside of the usual venues, tucked away in London, does indicate a desire for quieter diplomacy, away from cameras and the daily churn of US and Chinese press briefings.
From our stance, whenever negotiations stretch into multiple days, it tends to reflect either material progress being made—or, alternatively, deep disagreement that requires more time to unwind. Either way, this extension introduces a blend of short-term uncertainty and longer-term opportunity. We’re left reading between lines, as the lack of firm detail leaves markets only partially informed. Yet, actions speak where words don’t. The additional day signals intent. Both economic powers clearly believe there is still something on the table worth hashing out.
That said, we’ve seen this film before: high-level meetings with warm words and constructive tone, only to be followed by weeks of silence or even abrupt policy reversals. For now, traders should not be lured into complacency. Momentum in rhetoric does not always translate to changes in tariffs, restrictions, or capital flows.
Market Observations And Positioning
In recent sessions, flows into US equity options tied to materials and industrials have picked up, coinciding with headlines out of London. It’s evident that some are positioning for a friendlier trade outlook. However, we’d urge caution. Unless we see concrete commitments—a repeal of prior levies or at least a roadmap—this enthusiasm may unwind rapidly. We’ve learned over time that optimism alone cannot anchor pricing assumptions in these sectors with any reliability.
One should also note that with these talks overlapping with several upcoming data releases in the US, especially those influencing interest rate expectations, volatility may not be driven by trade news alone. This confluence of drivers could lead to misread sentiment. It’s tempting to link daily moves solely to soundbites out of negotiation rooms, but we must resist that impulse.
Lutnick’s comments might well prime participants for smoother trade relations to resume over coming quarters. But in the here and now, the absence of specifics suggests latent risk, especially to positions that rely on near-term easing of bilateral pressure. We’ve seen no commitment to rollback enforcement mechanisms or timelines for tariff reductions, and until that happens, only partial repricing of trade-exposed assets is justified.
In terms of structure, we’re also seeing activity in longer-dated volatility, with premiums rising modestly—indicative of the market assigning some odds to meaningful resolution, but only over a medium horizon. That’s consistent with past patterns: hope now, but hedge later.
We’ll be watching closely for any shift in tone from the Chinese delegation, particularly if they begin to speak to domestic media back home. That usually precedes a public pivot—whether positive or negative. Until then, we tread carefully, tempering expectations and making use of defined-risk constructs rather than directional leverage.
