FED: Kugler Sees It Most Likely That US Close To Maximum Employment
Fed Governor Kugler (permanent voter) views the labor market as stable and likely close to maximum employment, somewhat echoing Chair Powell on Wednesday saying “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid”.
Kugler’s full remarks on "Assessing Maximum Employment" can be found here.
- "I judge the labor market to be stable. Most likely, the labor market is also close to maximum employment given that the estimates of u-star from some of the models that I will consider in the rest of this speech are in the vicinity of 4.2%".
- “The past two recessions underscored that there are useful statistics beyond the unemployment rate that help inform a reading of maximum employment, and the past two recoveries suggest that the U.S. economy may sustain unemployment as low as 3.5 percent.”
- For reference, the unemployment rate was 4.18% in April and has averaged 4.15% since Jul 2024.
- "I cannot point to the best statistic or best model of maximum employment. I can only acknowledge that a rich set of models and indicators only benefits the policymaker. Given the uncertainty in estimating maximum employment in real time and the many options available, I consider it undesirable to adopt one particular measure to guide monetary policy”.
- "This is something to bear in mind as I approach the current review of the FOMC’s Statement on Longer-Run Goals and Monetary Policy Strategy, which we call our framework."
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TARIFFS: China increases tariffs on US to 84% from 34%
- The China tariff increase on the US is to 84% from 34% and is applicable from 12:01 China standard time on 10 April (so in a few hours).
- The language has escalated, too.
- From the press release via Google Translate: "The US's practice of escalating tariffs on China is a mistake on top of a mistake, which seriously infringes on China's legitimate rights and interests and seriously damages the rules-based multilateral trading system."
- Full statement link.
US TSYS: Tsys Briefly Pare Losses, Remain Weaker After China Tariff Retaliation
- Treasury futures pared down move briefly after China tariff response with 84% duty on US imports, up from 34%.
- June'25 10Y futures tapped 111-00.5 currently trades 110-20.5 (-26.5), 10Y yield 4.3898 +.0969. Curves bear steepen to new multi-year highs overnight: 2s10s currently +6.369 at 62.482 after tapping 73.84 during Asia hours.
- Stocks come back under pressure: SPX eminis -81.75 at 4938.25.
CHINA: China Raises Tariffs on US Goods, Sinking Sentiment
China's MoF formally hike tariffs on US goods, raising tariffs on US goods to 84%, and adding more US firms to China's unreliable list, and the export control list.
Equities slip on that China tariff raise - we knew Chinese leadership were set to meet to discuss capital markets, but it wasn't necessarily expected it would result in a tariff raise to 84% on US goods.
- USD/CNH rallies, while equity weakness presses the e-mini S&P back through 5,000. The impact on US 10y yield more contained - back to 4.386% at typing.
