Asian stocks were up overall Tuesday along with US stock futures as rumors spread that the Biden administration might scrap Trump-era Chinese trade tariffs. Treasuries dropped after reopening

Japan and South Korea were regional winners while S&P 500 and Nasdaq contracts rose about 0.5% from the close on Friday. The US markets were closed on Monday due to the Independence Day holiday.

Speculation has been rampant that the Biden administration will eliminate or reduce some of the tariffs imposed by the Trump administration on some $300 billion in imported Chinese goods. Policy makers fear if they merely attack inflation with interest rate hikes they may drive the economy into a recession and trigger massive stock losses going into the 2024 election cycle.

It is thought the Biden administration may announce the removal of the tariffs this week. It has been rumored the administration might open a probe into subsidies for specific industries which might lead to the targeted reimposition of tariffs on specific industries such as various technologies. However such a probe would require a year before are tariffs would even be recommended by the probe.

Charu Chanana, senior markets strategist at Saxo Capital Markets Pte. said, “Markets are likely to react positively on a knee-jerk because at this point we are hungry for any signs of positive news. But we don’t see the move impacting the global growth and inflation dynamics in a significant way.”

Overnight gains produced by the report of potentially lifted tariffs, were held through the day by commodity-linked currencies, while the yen fell and the dollar was volatile. Treasuries rose, passing 2..95%, continuing a global bond dip which began in Europe Monday.

Now all eyes turn to Australia, where the Central Bank will announce a decision on interest rates, expected to be a 50 basis point hike, and the first time it will have delivered two 50 basis point hikes in a row.