Chinese President Xi Jinping, US President Donald Trump and their latest tit-for-tat trade showdown have both countries claiming the ball is now in the other’s court, with the clock ticking toward another escalation in import tariffs. Following Xi’s new terms and the White House returning fire via social media, Trump appeared to signal openness to a deal with Beijing given its new terms. But on Sunday the administration’s tone changed again, with his adjutants saying the outcome would depend on the Chinese response.

Hours later, China’s Foreign Ministry made clear Beijing would take its cues from Washington’s next steps. “If the US continues on its wrong course, China will firmly take necessary measures to safeguard its legitimate rights and interests,” spokesman Lin Jian said at a regular briefing in Beijing. Chinese authorities haven’t announced a response to Trump’s market-denting threat to impose 100% tariffs over Beijing’s latest rare-earth curbs. But it’s early yet.

For its part, Wall Street didn’t seem to take Trump’s threat seriously on Monday. “While markets had to react to the US tariff news on Friday I suspect many will attempt to treat this as TACO in the making,” said Jordan Rochester, head of macro strategy for EMEA at Mizuho Bank, citing a trade known as “Trump Always Chickens Out.” —Natasha Solo-Lyons and David E. Rovella

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Former Israeli hostage Nimrod Cohen waves an Israeli flag at Ichilov Sourasky Medical Center in Tel Aviv on Monday. Photographer: Jack Guez/AFP/Getty Images

The 20 remaining living Israeli hostages among the more than approximately 250 taken by Hamas and other militant groups on Oct. 7, 2023, have been released. Leaders from across the Middle East and western nations met in Egypt Monday to celebrate the repatriation of the hostages, Palestinian prisoners and the end of a war that began with the killing of 1,200 people in Israel during the 2023 attack and eventually claimed the lives of tens of thousands of Palestinians as much of Gaza Strip was laid waste by the Israeli military. Going forward, only US pressure can turn the Gaza ceasefire into real peace, writes Bloomberg’s Editorial Board. It is still to be determined however whether the ceasefire will actually last, as well as what the end of hostilities mean for Gaza—and the future of Israeli Prime Minister Benjamin Netanyahu.

Buses carrying Palestinians released from Israeli prisons under a Gaza ceasefire and hostage exchange arrive outside the Nasser hospital in Khan Yunis Monday. Photographer: Omar al-Qattaa/AFP/Getty Images

The financial impacts of the US government shutdown are set to escalate this week, even as Senate Republicans show no sign of agreeing to Democratic demands that they extend healthcare coverage for millions of Americans who stand to lose it by year’s end. Indeed, Americans who use the Affordable Care Act are starting to feel the consequences of those expiring subsidies as insurance companies begin to send notices of rising premiums.

If there’s no shutdown deal soon, members of the military will miss their first paychecks. Treasury Secretary Scott Bessent has promised an unorthodox reprioritization of government payments to try and pay service members while Trump’s budget director moves forward with what administration lawyers have reportedly warned is an illegal wave of government firings.

Despite the continuing trade standoff, Wall Street traders appeared to see China-US negotiations in a positive light, with the artificial-intelligence rally (or bubble, depending on who you ask) powering ahead on Monday. Following its worst rout in six months in the aftermath of Trump’s 100% tariff threat, the S&P 500 jumped 1.6% to extend a bull market that’s already added $28 trillion to its value. The benchmark saw its best session since May. A key gauge of chipmakers surged nearly 5%. Here’s your markets wrap.

Broadcom shares jumped after OpenAI agreed to buy the company’s custom chips and networking equipment in a multiyear deal, part of an ambitious plan by the startup to add AI infrastructure. As part of the pact, OpenAI will design the hardware and work with Broadcom to develop it, according to a joint statement on Monday. 

Madagascar President Andry Rajoelina said he has left the Indian Ocean island nation because his life was in danger after weeks of youth-led street protests that some members of the military support. Demonstrations began last month over water and power shortages, sending thousands of people into the streets and leading to clashes with security forces in which at least 22 people died. The anger over a lack of basic services and government corruption mirrors recent backlashes in countries including Morocco, Indonesia, Nepal and Kenya against ruling elites.

Anti-government protesters in Antsiranana, Madagascar, on Oct. 2. Photographer: Fita/AFP/Getty Images

Brookfield will acquire the remaining parts of distressed-debt specialist Oaktree Capital Management it doesn’t already own, adding further heft to its credit business that’s emerged as a key driver of growth in recent years. New York-based Brookfield Asset Management and parent company Brookfield will acquire the outstanding 26% stake in Oaktree for about $3 billion, according to a statement on Monday.

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