The redo of the Geneva deal completed last month with China was re-completed with Pres. Trump posting that magnets – and necessary rare earths would be supplied “up front”, by China. The US would allow China students into our colleges and universities. Commerce Sec. Lutnick said that Trump would have loved the “gold gilded” rooms in London where the talks took place and that we could expect more trade deals this week and the week’s ahead. With the Trump 79th birthday parade scheduled for this weekend, more deals would be nice, but it may not be “deal time” for nations. .
Anyway, the US would continue to receive 55% in tariffs from China with 25% from Trump’s first term, 20% from the current term, and 10% from the fentanyl penalty.
China, for its part, said the deal on rare earths was for 6-months leaving it’s door open for backing out if tensions rise again (they could back out at any time of course).
Trump ended his Truth post, by thanking us for our attention to this matter. Attention noted!
The other news today came in the form of the CPI data. US headline CPI rose 2.4% y/y in line with some forecasts but below the 2.5% consensus and down from 2.9% prior. Monthly CPI was up 0.1% (unrounded +0.081%), also softer than expected. Core CPI increased 2.8% y/y (vs 2.9% expected) with a monthly gain of 0.1% (unrounded +0.130%), showing continued disinflation. So far, the tariff price fears have not materialized.
US yields and the USD moved lower on the news. Stocks went from negative to positive on the news but are closing lower on the day after the rally fizzled. .
At the end of the day, the yields remain lower with declines of =6 basis points in the 2-year, and -5.2 basis points for the 10 year. A solid 10-year note auction today (-0.7 basis point tail), helped to keep the yields toward the lows.
For the USD, the greenback was mixed with the dollar falling -0.53% vs the EUR, and -0.36% vs the GBP, but was up 0.29% vs the AUD and 0.39% vs the NZD.
The changes for the day for the USD vs the major currencies showed:
- EUR, -0.53%
- JPY, -0.15%
- GBP, -0.36%
- CHF, -0.27%
- CAD, Unchanged
- AUD +0.29%
- NZD +0.39%
Later in the day, a report that the US was advising Middle Eastern families of servicemen to leave the country for security concerns helped to push elevated oil prices even higher. The price of Crude oil is trading above $68 at $68.07 going into the end of day. That is the highest level since April 3. The gain is $3.09 on the day or +4.75% and represents the largest % gain since April 9th.
Gold was also pushed higher on flight to safety flows with a gain of $30.76 or 0.93% at $3353.
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