US: MNI POLITICAL RISK - Trump Punts Tariffs And Pivots On Ukraine
Jul-09 12:23
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Executive summary:
- President Donald Trump will hold a White House lunch today with the leaders of Gabon, Guinea-Bissau, Liberia, Mauritania, and Senegal to discuss “commercial opportunities”.
- Markets have largely shrugged off Trump’s latest tariff ultimatum, likely assessing that major trade partners will strike preliminary agreements before the new August 1 deadline or receive another extension.
- Markets have been less sanguine about the prospect of a punitive new tariff on copper imports, designed to reshore copper production in the United States.
- South Korea is eyeing an in-person meeting between Trump and President Lee Jae-myung. Japanese Prime Minister Shigeru Ishiba said Tokyo and Washington will "swiftly proceed with negotiations towards the newly set August 1 deadline".
- Trump told reporters yesterday he would "probably" tell the European Union within two days what tariff rate it can expect.
- Trump's economic advisor, Kevin Hassett, has emerged as the slight favourite to be nominated as the next Fed chair.
- Senate leaders are expected to meet with Israeli Prime Minister Benjamin Netanyahu this afternoon as negotiators in Qatar struggle to make a breakthrough on a Gaza ceasefire.
- Trump is leaning closer to endorsing a new Russia sanctions package. The primary concern for the White House is how to calibrate secondary sanctions without dramatically increasing tensions with China and India.
- Poll of the Day: Very few Americans support reducing or eliminating funding for social services.
Please find the full article attached below: US DAILY BRIEF
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Historical bullets
FOREX: MUFG See Current USDJPY Levels Close to Peaking
Jun-09 12:18
- USDJPY was well supported Friday as markets focussed on the above-estimate headline change in NFP and the sizeable beat for average hourly earnings growth in the US. The Fed’s Harker subsequently said he sees steadiness in 'solid' latest job data.
- Fresh weekly highs for USDJPY ensued, with the pair rallying as high as 145.09 and essentially matching the initial target of the 50-day EMA. Broader dollar weakness to start this week briefly tipped the pair back below 144.00, however, the ongoing cautious optimism surrounding potential progress for US/China trade talks have seen the pair edge higher to 144.50 in most recent trade. 142.12, the May 27 low, remains the important support.
- Notably, MUFG see the current USDJPY levels post-NFP data as close to peaking with scope building for another sustained move back toward the 140.00-level. They see the BoJ as likely turning more hawkish if global financial market conditions remain more favourable after the notable improvement following the de-escalation of trade tensions.
- MUFG highlight the inflation backdrop is increasingly likely to prompt a hawkish shift in BOJ policy. They add the BoJ will also not want to see JPY depreciation given the risks of an FX move feeding further super-long JGB instability that in turn would lead to possible complaints by the US.
US SWAPS: J.P.Morgan Recommend 3.875% Feb 43/3% Feb 49 Swap Spd Curve Flattener
Jun-09 12:15
Late on Friday J.P.Morgan recommended initiating maturity-matched 3.875% Feb 2043/3% Feb 2049 swap spread curve flatteners (0.8/1 weighted)
- This is a micro RV play, as they noted that “the maturity-matched swap spreads between the 3.875% Feb 2043 and the 3% Feb 2049 issues are well (and positively) correlated but currently appear mispriced by about 2bp”.
STIR: Repo Reference Rates
Jun-09 12:10
- Secured Overnight Financing Rate (SOFR): 4.29% (+0.00), volume: $2.667T
- Broad General Collateral Rate (BGCR): 4.27% (+0.00), volume: $1.072T
- Tri-Party General Collateral Rate (TCR): 4.27% (+0.00), volume: $1.043T
- (rate, volume levels reflect prior session)
