European Markets Turn Cautiously Optimistic Ahead of Powell Speech

Stocks

Summary:

The majority of the main European stock markets slowly moved into positive territory after the opening bell. Investors remain cautious while watching for more news about the Ukraine peace talks and US monetary policy.

Leading European stock markets reflected a cautiously positive sentiment on Friday as investors watched for progress on Ukraine peace talks and awaited a speech from US Federal Reserve chair Jerome Powell. He will speak on Friday at Jackson Hole, where central bankers gather for their annual meeting.

Markets also digested details of an EU-US trade truce and better-than-expected business activity data, announced on Thursday.

Despite the news that the German economy shrank more than initially estimated in the second quarter, the German DAX changed direction and made up its earlier losses, gaining around 0.1% after 11.00 CEST.

The FTSE 100, though trading in negative territory all morning, also followed suit and changed course, gaining a few points by late morning.

The Paris CAC 40 was up 0.2%, the Madrid IBEX 35 rose by 0.4%, and the European benchmark STOXX 600 increased by 0.2%.

As for the London blue chip index, the early morning slight dip appeared to be just a small correction. "The FTSE 100 saw a subdued start on Friday after achieving a record close above 9,300 yesterday,” said AJ Bell investment analyst Dan Coatsworth in his note.

Investors are focusing on the message Federal Reserve chair Jerome Powell might deliver at the Jackson Hole summit in Wyoming.

“Investors had been expecting a rate cut from the Fed next month so if Powell were to say anything suggesting rates might be kept on hold, it could see stocks come under greater pressure," said Coatsworth. He added that robust PMI data from the US on Thursday pointed to a strong economy, potentially reducing the chances of the Fed lowering borrowing costs.

A cut in interest rates would be the first of the year and it would give asset prices and the economy a boost — but it could also risk worsening inflation.

The Fed has been hesitant to cut interest rates this year out of fear that President Donald Trump's tariffs could push inflation higher, but a surprisingly weak report on employment growth earlier this month suddenly shifted focus towards the job market. Trump, meanwhile, has forcefully pushed for cuts to interest rates, directing fierce criticism towards Powell.

US markets closed in a gloomy mood

On Wall Street on Thursday, the S&P 500 slipped 0.4% to 6,370.17, continuing a gradual decline since a record on 14 August. The Dow Jones Industrial Average dropped 0.3% to 44,875.50, and the Nasdaq composite fell 0.3% to 21,100.31.

In other dealings early on Friday, the US dollar rose to 148.48 Japanese yen, from 148.37 yen. The euro slipped to $1.1590 from $1.1606.

Meanwhile, oil prices fell by midday in Europe; the US benchmark crude lost 0.2% and was traded at $63.38 per barrel. Brent crude, the international standard, also was down by 0.2% at $67.52 per barrel.

Oil prices moved higher yesterday, "as the initial enthusiasm over progress towards a ceasefire between Russia and Ukraine continues to fade", said ING in a note. Expectations of increased global uncertainty are driven by the difficulties of setting up a Putin-Zelensky summit and securing potential security guarantees for Ukraine.

Asian markets were also mixed on Friday

Asian shares were also mixed on Friday. In Tokyo, the Nikkei 225 rose less than 0.1% to 42,633.29 after Japan's core inflation rate slowed to 3.1% in July, from 3.3% in June.

ING Economics said in a note that price pressures were broadly in line with market consensus. Inflation staying above 3% raises the likelihood of a rate hike as soon as October, it said.

In Chinese markets, Hong Kong's Hang Seng index rose 0.9% to 25,339.14. The Shanghai composite index climbed 1.5% to 3,825.76.

South Korea's Kospi added 0.9% to 3,168.73. Australia's S&P/ASX 200 fell 0.6% to 8,967.40 as traders sold to lock in gains after the benchmark surged to record highs in recent trading sessions.

Source: Euronews

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Michelle

Economic

The U.S. and European Union granted businesses some desperately sought after clarity as they shared fresh details on their trade agreement on Thursday, but questions remain about whether the deal can really be trusted.

Thursday's update broadly echoed the framework announced by the U.S. and EU in July, which called for 15% tariffs as well as pledges for Brussels to amp up spending and investment in the U.S. New details include a cap of 15% tariffs on pharmaceuticals, lumber and semiconductors. Autos will face the same rate, but only after the EU makes legislation changes to reduce its industrial duties.

However, EU Trade Commissioner Maros Sefcovic on Thursday suggested the framework was just the beginning, leaving the door open for future changes to the deal.

Missing details

Despite providing some much-needed clarity, there are still various smaller, yet crucial, aspects missing from the current framework.

A muted market reaction from pharmaceuticals on Thursday highlighted investor skepticism and there was no mention of the wine and spirits sector in the deal.

"A lot of the details remain to be worked out," Penny Naas, who leads on the German Marshall Fund's allied strategic competitiveness work, told CNBC, pointing to for example so-called 'rules of origin.'

"These rules determine where value is most added to a product that contains multiple parts from multiple countries, and when it can be labeled 'European' or 'American,'" she explained. Naas noted that these rules come into play when it comes to for example transshipments — a process in which goods might originate from one country, but are then sent to another for final shipment to the U.S.

Carsten Brzeski, ING's global head of macro, meanwhile pointed out uncertainties "stemming from formalities and procedures at customs," which he says are particularly impacting small and medium-sized enterprises.

Some companies are already facing issues in this regard, with firms having to "recruit tariff specialists in order to clarify the new customs requirements," he said.

Trump's flip-flopping

Another concern is U.S. President Donald Trump's history of fact-paced changes of heart and policy shifts, Antonio Fatás, professor of economics at the European Institute of Business Administration (INSEAD), told CNBC.

The president for example doubled steep steel tariffs overnight, and later quietly expanded their scope.

Elsewhere, Switzerland was victim to the president's erratic decision making, with the country reportedly having been extremely close to a deal, which was then however pulled by Trump as he slapped 39% duties on Swiss exports to the U.S. almost overnight.

"The real issue for business is how to define a long-term strategy with a country that is no longer a reliable partner," Fatás said. "What used to be the most reliable partner for Europe has now become one of the most volatile, if not the worst, when it comes to economic policies," he added.

The German Marshall Fund's Naas also flagged this as a risk for businesses.

"This deal does not include any enforcement provisions, nor will it be codified by Congress, which means it could change at the direction of the U.S. President," she said.

Naas pointed to Section 232 tariffs as an example, with Trump having changed tariff rates on some products "at a moment's notice, and the Administration has expanded the scope to cover other products without warning."

To trust or not to trust?

Businesses are therefore left with a key question: to trust or not to trust the deal.

While Thursday's statement adds some clarity, the deal "remains fragile and could quickly dissolve," ING's Brzeski said in a note after the announcement. "The agreement contains numerous elements that could spark future tensions and escalation. Implementation, monitoring and enforcement of many of the intentions is not always clear," he added.

Naas echoed the calls for caution. While the U.S.-EU agreement appears "more likely to be stable" than some of Trump's other tariff policies like sectoral duties, it "will require the EU to remain on "good behavior" or else risk a sudden change," she said.

In addition to the uncertainties about the stability of the U.S.-EU deal, businesses are also contending with questions regarding various global shifts in the market, according to Gregor Hirt, multi-asset chief investment officer at Allianz Global Investors.

He told CNBC businesses are facing several key questions: "Is the US heading toward a recession or even worse, stagflation, and how resilient will companies' margin be in this kind of environment, especially considering the high market valuation in the US? Moreover, what further tools do policymakers have to counter a potential downturn, for example in terms of deregulation or specific sector 'incentives'?"

"And, finally, how will the shift away from global trade liberalisation and institutionalize framework affect long-term investment and supply chain strategies?" Hirt said, adding that these tariff-related issues are also key for companies ability to plan in the current environment.

Source: CNBC

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Adam

Commodity

Market Overview

WTI crude oil held above $63.5 per barrel on Friday, pacing for its first weekly gain in three weeks amid strong U.S. demand signals and broader geopolitical tensions. U.S. stockpiles posted their sharpest nationwide draw since mid-June, though a build at Cushing hinted at weaker underlying demand.

Refinery runs and robust exports contributed to the decline. Meanwhile, natural gas prices remained pressured as markets assessed supply risks alongside global uncertainty.

Traders also awaited Federal Reserve Chair Powell’s Jackson Hole remarks for policy guidance, which could further sway energy demand and market direction.

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

Natural gas futures ($NG) are trading at $2.78, slipping under trendline resistance after failing to sustain above $2.80. The 50-EMA ($2.84) and 100-EMA ($2.93) continue to slope downward, reinforcing bearish momentum. Support sits at $2.72 and $2.67, with a break lower exposing $2.61.

RSI at 46 signals weak momentum, staying below neutral, while repeated lower highs highlight ongoing downside pressure. Bulls need a decisive close above $2.88 to target $2.95 and $3.03, but until then, the bias remains cautious to bearish.

For now, natural gas is stuck in a downtrend, with sellers maintaining control unless price reclaims key moving averages and breaks the descending structure.

WTI Oil Price Forecast

WTI Price Chart

WTI crude oil ($USOIL) is testing resistance at $64.14 after rebounding from support at $62.63. The price has broken out of its descending channel, suggesting buyers are regaining control. Both the 50-EMA ($63.20) and 100-EMA ($64.03) are acting as near-term pivots, with the market attempting to hold above them.

RSI at 60 signals moderate bullish momentum, though not yet overbought. A clear move above $64.14 could open the path toward $65.12 and $66.46, while failure to hold $62.63 risks a pullback to $61.60.

For now, crude oil is in a cautious recovery phase, with traders watching if bulls can sustain pressure above the EMAs for further upside.

Brent Oil Price Forecast

Brent Price Chart

Brent crude ($UKOIL) is trading at $67.78, testing resistance at $68.21 after a steady climb supported by a rising trendline. The 50-EMA ($66.81) and 100-EMA ($67.26) are converging, reinforcing short-term support at $67.11. A breakout above $68.21 could open the path toward $69.14 and the psychological $70.00 mark.

RSI at 68 suggests strong bullish momentum but nearing overbought conditions, hinting at possible pullbacks before further gains. If price fails to sustain above $67.11, downside levels lie at $66.17 and $64.61.

For now, Brent remains in a recovery phase, with buyers in control as long as price holds above the rising trendline and key EMA levels.

Source: fxempire

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Warren Takunda

Central Bank

Markets headed into this week thinking the Bank of England could still sneak in another interest rate cut before the year is out, even if the August 07 policy meeting caused reason to be more cautious.

However, this week's above-consensus inflation print appears to have convinced the market that November is now off, with the odds of such a cut now less than 50/50.

However, some economists have looked at the data in detail and calibrated it against the Bank of England's guidance, and reckon a cut is still likely in November.

Morgan Stanley says the Bank of England will look through the July spike in prices, noting that strong air fares helped the surprise above-consensus outcome of 3.8% year-on-year in headline CPI.

Indeed, the outcome is still in line with the Bank's August forecasts. Even strong food price inflation - 4.9% y/y - was in line with expectations. Services CPI, which the Bank pays close attention to rose to 5.0% from 4.7% y/y.

"To us, the marginal news today is that the June inflexion in underlying services inflation was halted. For the BoE, we think, there is not much in here to change existing priors. We look for the next cut in November," says Bruna Skarica, an economist at Morgan Stanley.

Bank of England to Cut in November Say These Economists_1

Above: Market-implied expectations show investors see less cuts ahead.

Oxford Economics is also not willing to shift its stance on the UK outlook based on Wednesday's inflation figures, saying the above-consensus reading was the result of seasonal factors that should soon fade.

Oxford Economics forecasts inflation to average 3.5% this year and 2.8% in 2026. "There was little in the way of genuine news that shifted the monetary policy debate in either a more hawkish or dovish direction," says Andrew Goodwin, Chief UK Economist at Oxford Economics.

"We continue to think that several more Bank Rate cuts are likely over the next 18 months. However, there's now considerable uncertainty around the timing of those moves, and a scenario in which the MPC slowly feels its way to a neutral level over a long time horizon is becoming more compelling," adds Goodwin.

Economists at UniCredit are particularly 'dovish' on the outlook for UK interest rates, still expecting two rates cuts over the rest of this year and 75bp of cuts next year, more than financial markets expect.

Bank of England to Cut in November Say These Economists_2

Above: UK inflation is trending higher, whereas it's closing in on target in other countries.

Daniel Vernazza, Chief International Economist at UniCredit in London, acknowledges that the 2025 cuts might be skipped, but this is merely a delay and not a reduction in the total to come.

From a financial markets standpoint, this is an important call, as it implies cuts will be backloaded, hinting at notable GBP downside to come.

"We see the bank rate ending next year at 2.75%, which we see as broadly neutral. At the time of writing, financial markets are pricing only a 70% probability of 25bp cut in the remainder of this year, and only 40bp of cuts by the end of next year, to 3.6%," says Vernazza.

HSBC economists expect the Bank to cut rates to 3.0% by Q3 2026, implying four more cuts spread over that period.

According to HSBC's FX Strategist, Nick Andrews, this should weaken GBP versus the EUR. "Given the impact of government policies on growth and inflation over the last year, we also think the Autumn Budget poses a risk to GBP over the coming months."

However, not all economists are convinced and are inclined to err on the side of the market in expecting limited scope for further rate cuts, based on the observation that the economy isn't exactly crying out for support.

"We still expect the MPC to remain on hold for the rest of 2025, which is slightly tighter policy than the current market pricing of 0.5 cuts by December," says Robert Wood, Chief UK Economist at Pantheon Macroeconomics.

"Major data in the UK have increasingly outperformed over the course of the year," he explains.

Source: Poundsterlinglive

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Glendon

Economic

Forex

Dollar is holding broadly firm as markets head into the US session, though intraday momentum has slowed. Traders are reluctant to commit to new positions ahead of Fed Chair Jerome Powell’s highly anticipated Jackson Hole speech.

Expectations for a September rate cut have already been pared back sharply, with Fed fund futures now pricing around a 71% chance, down from over 90% just a week ago. Powell’s remarks will be closely scrutinized for any hint on whether he sees scope for a near-term move, or whether inflation risks still outweigh concerns about labor market cooling.

Market participants are also mindful that Powell’s tone will not be the only driver today. Comments from other Fed officials are expected to hit the wires, helping investors gauge the balance of views across the committee. By the end of the day, markets should have a clearer sense of the prevailing hawkish or dovish leanings inside the Fed.

Still, it must be stressed that today’s speeches are not the final word. Both the August nonfarm payrolls and CPI reports will be released before the next FOMC meeting, and those could easily shift expectations again. Market pricing will therefore remain highly data-dependent over the coming weeks.

For now, the Dollar sits as the strongest performer of the week, trailed by Swiss Franc and Loonie. Kiwi remains the weakest, followed by Aussie and Sterling, while Euro and Yen are trading in the middle of the pack.

In Europe, at the time of writing, FTSE is up 0.08%. DAX is down -0.03%. CAC is up 0.11%. UK 10-year yield is up 0.007 at 4.74. Germany 10-year yield is down -0.013 at 2.746. Earlier in Asia, Nikkei rose 0.05%. Hong Kong HSI rose 0.93%. China Shanghai SSE rose 1.45%. Singapore Strait Times rose 0.52%. Japan 10-year JGB yield rose 0.008 to 1.619.

Canadian retail sales jump in 1.5% mom June, but July seen weakening

Canada’s retail sales climbed 1.5% mom to CAD 70.2B in June, though the gain fell just short of expectations of 1.6% mom. The increase was broad-based, with all nine subsectors contributing, led by food and beverage retailers.

Excluding autos, sales rose an even stronger 1.9% mom, more than doubling forecasts of 0.9% mom, suggesting underlying consumer spending remains resilient.

In volume terms, retail sales advanced 1.5% mom in June, reinforcing that the pick-up was not purely price-driven. On a quarterly basis, sales grew 0.4% qoq, with volumes up 0.7% qoq, pointing to a modest but positive contribution from consumption to Q2 GDP.

However, early signals from Statistics Canada suggest the momentum could be fading. The agency’s advance estimate shows sales likely slipped -0.8% in July mom, raising the risk that strong second-quarter consumption may not carry through into the third.

Eurozone wages growth jump to 3.95%, supports ECB pause

Eurozone negotiated wages accelerated to 3.95% in Q2, up sharply from 2.46% in Q1, the ECB reported on Friday. Though well below the 2024 peak of 5.4%, the acceleration suggests cost pressures remain sticky.

Some analysts noted that much of the gain reflected one-off payments, raising the possibility that the rise is short-lived. Still, with services inflation remaining elevated, policymakers have little scope to accelerate easing after already cutting the deposit rate to 2.00%.

Whether wage growth cools in the coming quarters will be central to determining if the ECB can continue on its path toward looser policy.

Japan core CPI slows to 3.1% as rice inflation cools, but underlying pressures persist

Japan’s inflation slowed again in July, with core CPI (ex-fresh food) easing to 3.1% yoy from 3.3% yoy, slightly above expectations of 3.0% yoy. Headline CPI also dipped to 3.1% yoy. The moderation was driven in part by cooling rice prices, which rose 90.7% yoy after surging 100.2% yoy in June, alongside the reintroduction of energy subsidies. Together, these helped bring core inflation down from May’s 3.7% peak.

However, price pressures remain entrenched. Food inflation excluding fresh items actually quickened to 8.3% yoy from 8.2% yoy. Core-core CPI (ex-food and energy) stayed unchanged, elevated at 3.4%. Energy prices provided some relief with a -0.3% yoy annual decline, the first drop since March 2024, but this was not enough to counter stubborn underlying strength.

For policymakers at BoJ, the data paints a mixed picture: rice and energy are finally easing their grip on consumer prices, but persistently high core inflation highlights why interest rate hikes remain on the table. While inflation is clearly off its May peak, the road back toward the 2% target looks slow and uneven.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3384; (P) 1.3434; (R1) 1.3462;

Intraday bias in GBP/USD remains mildly on the downside for the moment. Fall from 1.3594 is in progress for 61.8% retracement of 1.3140 to 1.3594 at 1.3313. Firm break there will bring retest of 1.3140 low. On the upside, above 1.3481 minor resistance will bring retest of 1.3594 first. Overall, corrective pattern from 1.3787 is extending.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3090) holds, even in case of deep pullback.

Source: ACTIONFOREX

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Adam

Central Bank

Economic

When Federal Reserve Chair Jerome Powell gives his last speech in Jackson Hole, Wyo., investors will be listening for whether he signals an interest rate cut is coming next month.

But Powell's outline of two bigger questions facing the Fed will shape the future of the central bank in ways that will outlast his tenure and mark a key part of his legacy as chair.

Powell's widely anticipated speech on Friday morning will be delivered as the debate over the state of the economy, and the possibility of rate cuts, heats up.

In interviews with Yahoo Finance on Thursday, Kansas City Fed president Jeffrey Schmid and Cleveland Fed president Beth Hammack both offered some caution on the need for interest rate cuts as soon as next month, given recent inflation data.

"There's a lot of data we're going to get between now and September, and I walk into every meeting with an open mind about what the right thing to do is," Hammack said. "But with the data I have right now, and with the information I have, if the meeting was tomorrow, I would not see a case for reducing interest rates."

Schmid and Hammack's colleagues at the Federal Reserve Board, Michelle Bowman and Chris Waller, have been among those more vocal about the need for rate cuts. Investors were assigning roughly 69% odds on a 0.25% cut from the Fed on Sept. 17 as of early Friday.

Disagreement over the Fed's next move, however, is only a small part of the backdrop against which Powell is set to speak.

Most notable is pressure from President Trump, who this week called for Federal Reserve governor Lisa Cook to resign amid a controversy over two mortgage loans. The Financial Times reported Thursday that the Department of Justice sent Powell a letter calling on the Fed chair to remove Cook from her post.

Trump, who refers to Powell as "Too Late" for not cutting rates earlier this year, has regularly commented on Fed policy and said interest rates should be much lower than the current benchmark range of 4.25%-4.50%. Treasury Secretary Scott Bessent has also weighed in on monetary policy, saying in an interview earlier this month the Fed ought to consider cutting rates by 0.50% in September.

"I think that having an independent central bank has been an institutional arrangement that has served the public well," Powell said last month. "And as long as it serves the public well, it should continue and be respected."

Powell is also expected to lay out changes to the central bank’s policy framework review, which articulates the Fed’s strategy and commitment to fulfilling its congressional mandate for stable prices and maximum employment.

In particular, the central bank is expected to drop so-called average inflation targeting, a policy put in place pre-pandemic when inflation was running low and Fed officials wanted to avoid deflation.

This strategy has said that if inflation ran below 2% in years past, the Fed would tolerate it running above 2% in the future on the theory that it averages out. Given the recent bout of inflation and the risks it poses to the economy, the Fed is expected to drop that and focus on an inflation target of simply 2%.

Powell signaled the change in a speech in May.

“In our discussions so far, participants have indicated that they thought it would be appropriate to reconsider the language around shortfalls,” Powell said. “And at our meeting last week, we had a similar take on average inflation targeting.”

The Fed first created its monetary policy framework in 2012, which it adjusts every five years. And just as the changes announced back in 2020 had implications for monetary policy actions over the past five years — the Fed's language shift, it could be argued, kept the lid on rate hikes even as inflation accelerated in 2021 — so too could the changes Powell announces Friday send ripples for years to come.

“While the adoption of the new framework in 2020 was not the primary factor behind the Fed’s delay and the substantial inflation overshoot, it contributed to this outcome,” said Matt Luzzetti, chief US economist for Deutsche Bank

As a result, Luzzetti expects Powell’s speech to restore a more preemptive strategy for monetary policy, along with recognizing risks of supply shocks and a return to a balanced view of inflation and the job market.

James Fishback, CEO of hedge fund Azoria, argued Powell needs to acknowledge what he calls the “tragic mistake” of average inflation targeting.

Powell noted in his May speech that inflation could be more volatile going forward than in the 2010s and that the US may be entering a period of more frequent, and potentially more persistent, supply shocks.

"The economic environment has changed significantly since 2020, and our review will reflect our assessment of those changes,” Powell said in a speech in May.

Powell also stressed enhancing the Fed’s formal policy communications, particularly regarding the role of forecasts and uncertainty. Investors will watch for whether the Fed rolls out changes to its quarterly Summary of Economic Projections, which contains the famous "dot plot," a compilation of each member of the FOMC’s expectations for interest rates that year.

Source: finance.yahoo

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Samantha Luan

Economic

Forex

Political

Commodity

China–U.S. Trade War

For American farmers travelling through the Heartland scouting corn and soybean fields, it feels like 2019 all over again.President Donald Trump is back in power, a trade war with top soybean buyer China is raging, and growers are coping with prices that are near the lowest levels in years. Huge crops ahead are only going to make matters worse.It’s a familiar picture for the more than 40 growers, analysts and journalists taking part in the annual Pro Farmer Crop Tour that started on Monday and will cross seven states before ending in Minnesota on Thursday. In 2019, they were facing exactly the same conditions.

Back then, tensions were so high that a staffer from the US Department of Agriculture (USDA) was threatened, forcing the agency to pull their people out of the tour as a precaution. Things are much calmer this year, but anxiety is slowly building up — after all, the US has yet to sell a single cargo of soybeans to China from the harvest that starts next month.“I just wish they’d start buying again,” said Bill Timblin, a Nebraska farmer on the tour. He hopes the Chinese market isn’t gone for good.

American farmers, a key voting bloc for Trump, are growing increasingly worried as harvest approaches. In a letter to the president this week, Caleb Ragland, who heads the American Soybean Association, warned growers are near a “trade and financial precipice” and cannot survive a prolonged trade war with China.“Soybean farmers are under extreme financial stress,” he said, urging the administration to reach a deal with China to remove duties. “Prices continue to drop and at the same time our farmers are paying significantly more for inputs and equipment.”

A gauge of grain prices tracked by Bloomberg fell earlier this month to the lowest since the pandemic in 2020.The USDA is already forecasting a record corn crop for the season starting in September. While the soy harvest will be smaller than last year as farmers planted less, yields are on track to hit a record.Partial results from the crop tour indicate bigger corn crops than last year in all states but Illinois. Indiana is currently the only state where soybean counts were lower than in 2024. Scouts crossed Ohio, South Dakota, Indiana, Nebraska, Illinois, Iowa and Minnesota. The combined result is expected on Friday.

In typical years, China buys on average 14% of its estimated soybean purchases before the US begins gathering its crop on Sept 1, according to an analysis by the American Soybean Association provided to the administration. The impact is being felt from Chicago to the Pacific Northwest, which is home to several export elevators dedicated to shipping American crops to Asia.

Steve Swanhorst, a South Dakota farmer on the tour, said he isn’t surprised. Trump was transparent about his plans on a variety of issues including tariffs and immigration, he said in an interview.“We had to know it was going to get rough,” he said. “You’ve got to give Trump some credit because he isn’t scared to get out of the box.”Chip Flory, who has taken part in all but one tour since 1988 and is now one of the hosts, is still positive.

“China has the need for soybeans,” he said. “There is going to come a time when they have to book beans.”Thousands of miles away from the crop tour, in Washington DC, the head of the US Soybean Export Council (USSEC) echoed that idea.“We are optimistic that some sort of a trade deal will be made soon,” Jim Sutter, USSEC’s chief executive officer, said in an interview at an event hosted by the group. “We don’t know exactly how soon.”

Luke Lindberg, the USDA’s undersecretary for trade and foreign agricultural affairs, said the government has created “very real” opportunities to get American products into new markets and that sales to destinations other than China are growing as a result.“The combines are firing up, and we need to get that soy crop sold around the world, we’re very aware of that,” he said at the USSEC event. “There are deals on the horizon that will make a significant impact for the American farmer.”

Still, concerns about China’s absence from the market at a time when growers are expected to harvest big crops are generating anxiety beyond the crop tour.

At the Iowa State Fair last week, Aaron Lehman, president of the centrist Iowa Farmers Union, said trade is top of mind after the US lost foreign markets during Trump’s first trade war with China. The Asian nation turned to South America for supplies instead.“Last time we went through this we lost lots of customers overseas and they have not come back to us,” said Lehman, who grows corn, soybeans and hay in Polk County. “We know there are things we need to do to get to fair trade for farmers, but we are not getting any closer to that with this approach.”