Mike Dolan
London (Reuters) - U.S. and global markets are important today
Mike Dolan, General Editor, Finance and Financial Markets
On Monday, the market completed a haircut round-trip for the last six weeks with the dramatic reset of U.S.-China tariffs. The piercing of the holes is now evaluating whether anything in the actual economy breaks down in the process.
In today's column, I explore whether the sudden relaxation of China's tariffs may be related to an economic theory that has long been cherished by American conservatives: the Laver curve.
Enter all the market news today.
Today's Market Minutes
*The White House executive order said on Monday that the U.S. will reduce the "minimum" tariffs on Chinese goods from 120% to 54%, with a fixed fee of $100, starting on May 14.
*U.S. President Donald Trump arrived in Saudi Arabia on Tuesday to start a four-day swing, starting a four-day swing from the Gulf region, rather than a security crisis from the war in Gaza to an escalating threat to Iran’s nuclear program.
*Apple's success depends on the iPhone, which helps transform the company from a niche player in the personal computer industry to one of the largest companies in the world. Most of this is due to its supply chain in China. Now, geopolitical tensions and a trade war are calling for doubt.
*The U.S. and China's move to lower import tariffs and negotiations to each other has been widely welcomed by the market, but downgrading and reducing the trade in energy commodities has little effect. Check out why in the latest work by Reuters columnist Clyde Russell.
*Split is emerging as the Federal Reserve and other major central banks try to assess the economic impact of a rapidly shifting trade war. The Fed's cautious stance risked leaving the chair Jerome Powell and his team again behind the curve. Read the latest information from Reuters columnist Jamie McGeever.
Reset, surge and keep
The S&P 500, Nasdaq and Dow Jones indexes had 3-5% gains on Monday, the biggest single-day percentage increase since April 9. Now Standard & Poor’s is now back within 1% of the year, surpassing the 200-day equilibrium average for the first time since late March.
Stock Futures called a sum on Tuesday but retained most of their recent gains.
The dollar reached its peak in a month after China's aggressive trade news, until it fell a little today. China's maritime renminbi has surpassed its best since the November U.S. election.
After a deal between the two largest economies on Monday, the White House followed up with an executive order saying the U.S. would also reduce its "minimum" tariffs on Chinese freight from 120% to 54%.
Meanwhile, U.S. fiscal yields returned to mid-April levels as Fed expectations returned to two cuts this year.
Back to the first party? OK, not very.
U.S. tariffs have emerged from the top of the mountain, and investors' relief is obvious. Goldman Sachs has reduced its chances of a U.S. recession from 45% to 35%. They were the first major brokers to do so.
BlackRock CEO Larry Fink said the deficit began to shock investors due to the concerns and uncertainty of the trade war, and tens of thousands of financial firepower were idle in cash.
The April 2 move was still suspended for only three months and negotiations were held. Currently, the overall U.S. tariff rate is almost five times that of the beginning of this year, even though it has almost halved from last week.
In fact, according to Fitch Credit Ratings, the current effective tariff rate is about 13%, so it remains the highest since World War II.
Economic stress tests are unfolding as everyone is waiting and watches, with April’s consumer price report due Tuesday, with retail and industrial figures to be sold later this week.
The annual inflation rate for title last month is expected to remain stable at 2.4%.
But before the report, there was a deep breath, after news that the prices of new U.S. cars soared in April, suggesting that Trump's automatic campaign measures have at least been gone in the auto market. Cox Automotive's Kelley Blue Book shows that after discounts and promotions, consumers paid an average of 2.5%, more than double the typical 1.1% in recent years.
There were further phobia between households and companies before the tariff scan.
Top U.S. banks’ loan officials reported weaker demand for many types of credit in the first three months of the year, reversing a brief increase in loan demand in the last quarter, according to a Fed report released Monday.
Elsewhere, stocks around the world remain buoyant on tariffs – rising higher and higher in most Boers Islands in Asia and Europe. Positive UK wage data and emotional reading of German Zabeihai investors help.
Be sure to check out my column today, where I have a better understanding of the effectiveness of tariff hikes, why they are returned from the edge, and why budget and government revenue considerations are probably the most important now.
Daily pictures
Price inflation for U.S. consumers will be released Tuesday as households may begin experiencing the impact of April 2 import tariffs. Due to various lags related to the expiration of existing contracts and the producers absorbed some hit singles, economists believe today’s report will paint an incomplete picture. It may take several months to reveal the full impact.
Tariff targets have been changing according to the U.S.-China reset on Monday. It is clearer that the gap between inflation trends in the United States and China has been large since the pandemic, with Beijing reporting this week that CPI inflation in April remains negative. This not only shows the differences in domestic demand between the two countries, but also expresses relative competitiveness.
Events to watch today
*US April Consumer Price Report (8:30EDT)
*New York Federal Reserve Issues First Quarter Household Debt and Credit Report (10:00EDT)
*Bank of England Governor Andrew Bailey and Chief Economist Huw Pill
*EU Finance Minister meets with European Central Bank Vice President Luis de Guindos in Brussels
*U.S. President Donald Trump visits the Middle East in the Three Kingdoms tour of Saudi Arabia, Qatar and the United Arab Emirates (May 16)
*NATO Secretary-General Mark Rutte travels to Ankara before an informal meeting in Natato from 14 to 15 May
The opinions expressed are the opinions of the author. They did not reflect the views of Reuters News, which is committed to integrity, independence and freedom from prejudice under the principle of trust.
(Edited by Mike Dolan; Nia Williams)