Bessent on Bloomberg TV mentioned that around 100 countries are likely to adopt a minimum tax rate of 10%. This aims to create a baseline for future tax agreements. However, there are still uncertainties in negotiations with Japan, the EU, Mexico, and Canada. These issues might make a zero tax rate hard to achieve.

Global Tax Coordination

Bessent’s recent comments suggest a significant shift in global tax coordination, with about 100 countries expected to adopt a minimum reciprocal tax rate of 10%. The aim is to prevent countries from competing excessively on tax rates to attract capital. Instead of allowing tax rates to drop to zero, this establishes a clear lower limit. Even if talks with the EU, Japan, Mexico, and Canada are still unresolved, broader efforts to align tax policies across countries are advancing. These negotiations might take weeks or months due to local politics and trade policies, but the overall goal of a more streamlined agreement is still on the horizon. A zero tax rate now seems even less likely. In the short term, it’s important to consider how these tax developments impact investor expectations. This is particularly relevant in interest rate markets, where medium-term inflation predictions often depend on fiscal policies. Traders should be aware that there’s now a more stable foundation for tax revenues. Regions with lower voluntary tax collections and larger deficits may face increased scrutiny from market participants. Derivatives traders observing yield spreads in relevant bond markets or adjusting expectations in currency pair volatility should be cautious. They shouldn’t base future policy expectations solely on domestic political news. As these international tax discussions progress slowly, short-term price fluctuations could arise among economies aligned with the OECD.

Impact on Liquidity Patterns

In terms of liquidity patterns, especially during monthly options cycles, we may notice changes in gamma positioning from dealers as new tax developments influence broader macro themes—particularly profit repatriation strategies among multinational companies. We saw a similar situation in 2017 and 2018 when US tax reforms altered capital market flows unexpectedly. These changes rarely fit neatly into typical currency or bond pricing. Therefore, we are closely monitoring minor shifts in two-week and one-month implied volatilities across affected currencies. Low-delta options in these pairs, previously seen as stable, may start to move as underwriters adjust to new scenarios. These smaller shifts, rather than huge breakouts, are likely where structured products desks and fast-money traders can find mispricings. While headlines focus on long-term tax structures, we are more interested in how this influences next month’s positioning. When implied volatility changes before known events, experienced traders adapt. This is where risk is being identified and reassessed. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now