Stock futures were up as much as 106 points on Wednesday.

All after Treasury Secretary Steven Mnuchin said the U.S. and China were “almost there” on a trade deal. “We’re about 90% of the way there (with a deal) and I think there’s a path to complete this,” he told CNBC.  He also confident President Trump and President Xi Jinping can make some progress at the G-20 meeting.

Remember, Trump is meeting with Xi this weekend in Osaka, Japan.   

The outcome of that meeting is pivotal for an ailing global economy and U.S. financial markets.  Any positive results following the G20 could produce a sizable global rally by next Monday.  

What’ll be interesting to see is if President Trump enforces his tariff threat if there’s no deal. 

While many believe we’re not likely to see a deal this weekend, there won’t be new tariffs.

In fact, a Bank of America Merrill Lynch survey found that two-thirds of its respondents believe there will be no deal this weekend. They also believe there won’t be any new tariffs either.  

UBS analysts expect a “ceasefire with a handshake agreement” between Trump and Xi that would avoid escalation of the national security issues and tariffs, and aim for a deal later this year. Trump would likely refrain from putting his threatened 25% tariffs on the remaining $300 billion in Chinese goods, as noted by CNBC.

This Should Bring Sizable Relief

Just yesterday, Commerce Secretary Wilbur Ross spooked the market, saying the President is ready to proceed with tariffs on the remaining $300 billion of Chinese goods. 

“We will eventually make a deal,” Ross told CNBC.  “But if we don’t, the president is perfectly happy with continuing the tariff movements that we’ve already announced, as well as imposing the new ones that he has temporarily suspended.”

Ross is also downplaying the idea of any agreement being reached at the G20, June 28-29, noting the G20 is not a place “where you’re going to negotiate a 2,500-page agreement. There may be an agreement on the path forward, but that’s about as far as we can expect it to go.” 

However, the market seems to breathe a sigh of relief after this morning’s comments.