US-EU: FT-EU Weighs UK-Style Trade Deal w/US
Jun-19 09:07
The FT reports that the European Union is considering signing a thin United Kingdom-style trade deal with the United States once the 90-day 'reciprocal' tariff reprieve ends on 9 July. This would avoid (for now) the EU imposing retaliatory tariffs on the US, which in turn would risk further escalation in trade tensions between Brussels and Washington, D.C.
- FT: "Michael Clauss, adviser to German Chancellor Friedrich Merz, told an FT Live event in Berlin on Thursday that instead of a full deal by July 9, he expected “a declaration saying: ‘OK, this is a little bit along the model of the US-UK [agreement]’.”
- The report claims that agreeing to such a deal would avoid the divisive issue of retaliation against the US. For some countries, there is support for hitting back against US measures (France), while others (Italy, Hungary) want to maintain talks and avoid major escalation (for example, US President Donald Trump's threat of 200% tariffs on wine and whiskey).
- Retaliatory tariffs would only require a qualified majority vote in favour, rather than full unanimity. The report notes EU officials wanting to clear the QMV hurdle (55% of countries representing 65% of the EU population) comfortably to demonstrate unity, and therefore go into talks with a stronger bargaining position.
- Speaking at the G7, Trump said of the EU “We’re talking, but I don’t feel that they’re offering a fair deal yet,”. As CNBC notes, major disagreements on digital regulation and taxation remain obstacles to a deal.
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EQUITIES: EU Bank Put Spread
May-20 09:07
SX7E (20th June) 200/185ps 1x2, bought for 2 in 6k.
BOE: Pill: Labour market / wage data still high (despite easing)
May-20 09:03
Asked about PAYE data:
- "Yes, we follow that data very closely. Data on labour market quantities is difficult. I think the bank has recognised, and I would agree with that there's been an easing in the labour market. I think the Bank is suggesting the labour market is easing, and I think that's on the easy side of equilibrium... And I think that does weigh on wage dynamics, and that weighs on the inflation process. This is part of the transmission mechanism monetary policy. So I'm not pushing back against that that's the sense in which, think there's a question of pace, rather than direction here. But I'd also say that for all that there's none. Of course there are lags in transmission and so forth. It's also true that some of the key indicators of pay dynamics remain quite strong."
- Goes on to say that AWE data is still "running at a pretty high rate"
- "Even if you look forward to indicators that many of my colleagues and I too put quite a high weight on, like the agency pay settlement survey, which looks a me more reassuring three and a half to 4% at the end of this year. I mean, three and a half to 4% would still represent quite a strong page pace of wage growth relative history, in particular, when you take into account the productivity growth in the UK, has been very weak for some time. So I think the challenge is, and of course, the real income persistent story that I was just trying to describe, and a little bit in the spirit of what I said to Theo, that is a possible explanation of why what seems like weakness in the labour market can be associated with still nominal stronger than expected nominal dynamics."
GILTS: Block trade
May-20 09:00
Gilt Block trade is spread related:
- G M5 8k at 91.80.
- G U5 4k at 91.80 and 4k at 91.81.
First notice for Gilt is the 29th May, these should start to pick up into the end of this week.
