Delay Of China Tariffs Eases Trade War Tension

The economic calendar showed services and new home sales data due out later this morning. But the market was keyed to the Federal Beige Book report due out on Wednesday, and the ramp up to the February payrolls report, set for release on Friday.

The U.S. Trade Representative's office formally announced Tuesday it would postpone indefinitely the tariff increase scheduled to take effect March 2. Tariffs launched in September on China made goods valued at $200 billion will remain at 10%, rather than increase to 25% as scheduled.

Expectations are rising that President Donald Trump and China's President Xi Jinping will meet for a summit, possibly before the end of March, and finalize a new trade agreement between the two countries. Some tariffs may remain in place, as a backstop in case China falls short of its pledges in the deal. China so far has committed to boost its U.S. imports by a cumulative $1.2 trillion over six years. A partial removal of tariffs could limit the reaction to the deal by the stock market, which is struggling to regain highs notched just before the China tariffs were put into place.