Bank of America has analyzed historical currency movements surrounding the upcoming meeting between US President Trump and Chinese President Xi Jinping, scheduled for May 13-15 in Beijing, and concluded that modest renminbi appreciation often follows these summits.
The bank reviewed USD/CNY performance around six Trump-Xi meetings over the past decade. Its findings show that, on average, the yuan strengthened by about 30 basis points in the 10 trading days after those summits. That appreciation increased to roughly 64 basis points when the window is extended to 30 days post-meeting.
Equities showed a muted reaction in these episodes. The Shanghai Composite Index registered an average decline of 0.4% in the 10 days following Trump-Xi meetings, a result Bank of America interprets as reflecting cautious market sentiment about the extent to which trade frictions would ease.
Media reports on the agenda for the forthcoming Beijing talks indicate the discussions may broaden beyond trade and tariffs to cover Iran, Taiwan and technology supply chains. Within those reported talking points, the United States is seeking China’s influence to press Iran toward an agreement aligned with US terms. At the same time, China is reported to be aiming for relaxation of US export controls on advanced semiconductors, while the United States is seeking concessions on rare earth exports.
Recent central bank activity has also caught market attention. The People’s Bank of China has been setting its daily yuan fixing at levels that are higher than market expectations and above the prevailing spot rate. Bank of America interprets that pattern as the central bank tolerating some mild yuan weakness as the summit approaches.
On deal expectations, the bank anticipates that negotiations are more likely to yield narrower, sector-specific agreements rather than a broad, sweeping package. That assessment follows from the historical patterns and the complex, multi-issue agenda reportedly under consideration.
Key points
- Historical analysis of six Trump-Xi meetings shows the yuan tends to appreciate about 30 basis points in the first 10 days and about 64 basis points after 30 days.
- The Shanghai Composite has averaged a mild 0.4% drop in the 10 days following these summits, indicating tentative equity reactions to shifts in trade expectations.
- The People’s Bank of China’s fixing strategy suggests a tolerance for limited yuan weakness in the run-up to the Beijing meeting, while Bank of America expects sector-focused agreements rather than a broad settlement.
Risks and uncertainties
- Agenda breadth - With reports that talks may cover Iran, Taiwan and tech supply chains, outcomes could be uneven across sectors, affecting technology and trade-exposed industries.
- Policy signaling - Central bank fixing above market expectations suggests policy tolerance for short-term currency moves, creating uncertainty for currency-sensitive exporters and importers.
- Limited deal scope - Bank of America’s expectation of narrower, sector-specific deals implies that broader market relief from trade tensions may be limited, sustaining cautious sentiment in equities.
The analysis provides a historical lens on currency and equity reactions to high-level US-China engagement, while highlighting how central bank behavior and a multi-issue agenda could shape market responses in the near term.