SOUTH KOREA: Country Wrap: Finance Minister in Washington on Trade Talks
Jul-29 05:13
- The presidential office said Monday the United States has been pressing South Korea to further open its agricultural and livestock markets in trade negotiations ahead of the tariff deadline, while Seoul is working to minimize concessions. Woo Sang-ho, senior presidential secretary for political affairs, made the remarks as South Korea continues talks with Washington to avert the 25 percent reciprocal tariffs before the Aug. 1 deadline set by the Donald Trump administration. "It is true that the U.S. side is exerting very strong pressure in the tariff negotiations, particularly in the agricultural and livestock sectors," Woo said in a briefing. "The government is striving to minimize concessions in order to protect domestic industries as much as possible." (source Yonhap)
- Finance Minister Koo Yun-cheol will hold high-level trade talks with his U.S. counterpart in Washington later this week, the finance ministry said Monday, as the Aug. 1 deadline for tariff negotiations approaches. Koo will depart Tuesday for the U.S. capital, where he will hold talks with U.S. Treasury Secretary Scott Bessent on Thursday (local time), just one day before the United States is expected to resume hefty tariff enforcement on South Korean goods. The minister had originally been slated to attend a "2+2" meeting last week with Trade Minister Yeo Han-koo, along with Bessent and U.S. Trade Representative Jamieson Greer. However, the talks were postponed due to scheduling conflicts of Bessent. (source Yonhap)
- The Kospi is bucking weaker regional trends, up nearly 0.60% and firmly above the 3200 level. Earlier we had headlines of corporate tax increases and changes to the capital gains tax, but these shifts have been flagged in the local media prior to today, which may be limiting the market impact.
- The Won is weaker again today in line with regional trends, off by -0.15% to 1,391.30
- The KTB curve has rallied again today with yield 1-2bps lower. KTB 10 yr at 2.83% (following yesterday's close of 2.84%)
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US FISCAL: Available "Extraordinary" Measures To Ward Off X-Date Pick Up
Jun-27 20:16
Treasury reported Friday that as of Jun 25 it had $130B in remaining "extraordinary" measures (of a total $378B available) to ward off an "x-date" of running out of resources before defaulting. That's the highest in 2 weeks.
- Combined with $334B cash as of Jun 25 (after a bit of a buildup after the mid-June tax deadline), that's a total of roughly $465B in total resources available.
- We noted earlier this week that Treasury told Congress that it was required to extend its debt issuance suspension period from Jun 27 to Jul 24, in effect prolonging the use of extraordinary measures while we await a resolution to the debt limit impasse, probably through the fiscal legislation currently going through Congress.
- Realistically, fiscal dynamics so far this year point to potential for Treasury to get into September without running out of cash + extraordinary measures. That seems to be the broad market expectation.
US DATA: Cleveland, Dallas Fed PCE Medians Show Progress But Still Above-Target
Jun-27 20:01
The Cleveland and Dallas Fed's median PCE metrics showed a notable drop in May. All indices suggest PCE inflation running above 2%, and higher than the actual core and headline PCE measures, but pressures appear to have cooled from a pickup in the early months of the year.
- The Cleveland Fed's median PCE measure came in at 0.22% M/M, a 10-month low after April's 15-month high 0.31%. This left median PCE at 3.01% on a Y/Y basis, down from 3.06% prior for a the joint-lowest (with Feb) since September 2021.
- The Dallas Fed's annualized median rate fell to 2.01%, from 2.65% prior for a 10-month low. The 6-month annualized rate edged lower to 2.74% (2.76% prior), a 4-month low, with the Y/Y rate ticking down to 2.55% from 2.56%, echoing the Cleveland Fed for the lowest reading since September 2021.
USDCAD TECHS: Pivot Resistance Remains Intact
Jun-27 20:00
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3920 High May 21
- RES 1: 1.2710/3803 20- and 50-day EMA values
- PRICE: 1.3658 @ 16:23 BST Jun 27
- SUP 1: 1.3618 Low Jun 26
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD has pulled back from its recent highs. The primary downtrend remains intact and short-term gains appear to have been corrective. Key support and the bear trigger has been defined at 1.3540, the Jun 16 low. Clearance of this price point would resume the downtrend. Any reversal higher would instead signal scope for a stronger retracement. Pivot resistance to monitor is at the 50-day EMA, at 1.3803.
