MNI US OPEN - Tariff Cuts on Table at US-China Weekend Talks
EXECUTIVE SUMMARY
- TRUMP TEAM SEEKS TARIFF CUTS, RARE EARTHS RELIEF IN CHINA TALKS
- TRUMP BRINGS MILLIONAIRE TAX IDEA BACK TO LIFE
- INDIA SAYS IT THWARTED PAKISTAN AIR STRIKES AS TENSIONS SOAR
- CHINA'S APRIL EXPORTS STILL STRONG; IMPORTS CATCH UP
Figure 1: Germany's DAX rises to new record high
Source: MNI/Bloomberg
NEWS
US/CHINA (BBG): Trump Team Seeks Tariff Cuts, Rare Earths Relief in China Talks
The Trump administration is weighing a dramatic tariff reduction during weekend talks with China to de-escalate tensions and temper the economic pain both are already starting to feel. People familiar with preparations for the talks, which are due to begin in Geneva on Saturday led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, say the US side has set a target of reducing tariffs below 60% as a first step that they feel China may be prepared to match. Progress in two days of scheduled discussions could see those cuts being implemented as soon as next week, they said.
US/CHINA (RTRS): China Says It Has Full Confidence in Ability to Manage US Trade Issues
China has full confidence in its ability to manage U.S. trade issues, Vice Foreign Minister Hua Chunying said on Friday, a day before officials from both sides are set to meet in Switzerland to discuss the tariffs they have imposed on each other. "We have no fear," Hua told a small group of reporters at a middle school in a rural county in southwestern China, adding that the trade policy of the U.S. administration cannot be sustained. The weekend talks involving top U.S. and Chinese economic and trade officials are widely seen as a first step towards resolving a trade war that has disrupted the global economy. President Donald Trump said on Thursday that the U.S. tariffs on Beijing of 145% would likely come down.
US/JAPAN/S.KOREA (BBG): Lutnick Warns South Korea, Japan Deals More Complicated Than UK
Commerce Secretary Howard Lutnick said that trade deals with South Korea and Japan could take significantly more time to complete than the framework agreement President Donald Trump announced Thursday with the UK, in a signal that some Asian partners may have to wait for tariff relief. “You’ve got to spend an enormous amount of time with Japan, South Korea. These are not going to be fast deals,” Lutnick said in an interview on Bloomberg Television.
US/JAPAN (MNI): Nippon Steel Pres. – Our Position on US Steel Acquisition Unchanged
President of the Nippon Steel Corporation Eiji Hashimoto says, amid the uncertainty of trade negotiations between Tokyo and Washington, D.C., that "Our position on the planned acquisition of US Steel remains unchanged...Taking all [of the] stake continues to be the starting point for negotiations with the US gov't...We are presenting a range of proposals to the US." Vice Chair Takahiro Mori says that the Committee on Foreign Investment in the United States (CFIUS) is expected to make a recommendation on the deal to US President Donald Trump by 21 May, with Trump expected to have made a decision by 5 June. Mori says CFIUS has been "extremely honest" in its review process of the US Steel deal.
US/INDIA (RTRS): India Offers to Slash Tariff Gap by Two-Thirds in Dash to Seal Trade Pact With Trump
India has offered to slash its tariff gap with the U.S. to less than 4% from nearly 13% now, in exchange for an exemption from President Donald Trump's "current and potential" tariff hikes, two sources said, as both nations move fast to clinch a deal. This would mean that the average tariff differential between India and the U.S., calculated across all products without weighting for trade volume, would be reduced by 9 percentage points, in one of the most sweeping changes to bring down trade barriers in the world's fifth largest economy.
US (WSJ): Trump Brings Millionaire Tax Idea Back to Life
Fifteen days after taking a marginal tax-rate increase off the table, President Trump put it back in play. The president, who rejected a “millionaire tax” April 23, is now considering backing a tax structure that would return the top individual income-tax rate to 39.6% from 37% for people making over $2.5 million, according to people familiar with White House discussions.The move could create breathing room as Republicans struggle to squeeze Trump’s tax cuts into a fiscal bill they are trying to unveil in the next few days and push through the House this month. The higher the top tax rate goes, the easier it could be for Republicans to avoid deep Medicaid cuts and reduce other taxes.
INDIA/PAKISTAN (BBG): India Says It Thwarted Pakistan Air Strikes as Tensions Soar
India said it “neutralized” Pakistani drone and missile attacks targeting several military sites on Thursday night, marking an escalation in hostilities between the two nuclear-armed neighbors. Military stations in the northern cities of Jammu, Pathankot and Udhampur near the border with Pakistan were targeted, India’s Ministry of Defence said Thursday in a post on X. “The threats were swiftly neutralized using kinetic and non-kinetic capabilities,” the ministry said, and no casualties were reported.
BOE (MNI): MPR Forecasts to Be Staff Proposals Not “Best Collective Judgment” of MPC
Nothing on the immediate monpol outlook in Bailey's speech but this is a key change to how the BOE produces forecasts in the MPR: "We will maintain a baseline projection, based on a staff proposal, one that a majority of the MPC agrees is a reasonable baseline, rather than one that meets an elusive notion of the MPC's 'best collective judgement'. And we will use scenarios as vehicles for exploring risks around the baseline and accommodating differences of views on the Committee." The other highlights from the speech are around how the scenarios should be interpreted (the rest of this part is very similar to Lombardelli's comments yesterday.
ECB (BBG): ECB’s Rehn Says Disinflation on Track, Growth Outlook Weakening
The European Central Bank’s outlook is unclear because of US tariff policy, according to Governing Council member Olli Rehn. “Recent data has shown signs of recovery in the euro area, but the outlook remains clouded by exceptional uncertainty due to President Trump’s trade war,” he told a conference in Helsinki, adding that “disinflation on track and the growth outlook weakening” has allowed the ECB to cut interest rates seven times.
ECB (BBG): ECB’s Simkus Says More Cuts Needed as US Tariffs Weigh on Growth
The European Central Bank must lower interest rates further as the euro-area economy is yet to feel the full force of US tariffs and inflation is expected to continue to slow, Governing Council member Gediminas Simkus said. While economic activity held up well at the start, recent geopolitical trends including trade threats from US President Donald Trump have been bad news, Simkus said in an interview with Bloomberg Television on Friday. At the same, he sees “clear disinflationary forces” at play.
GERMANY (BBG): Germany Says Trump and Merz Agree on Need for Trade Deal
Germany’s new chancellor, Friedrich Merz, and US President Donald Trump agreed that trade disputes should be resolved quickly and discussed the need for close cooperation between the two nations. In his first call with Trump since taking office on Tuesday, Merz also stressed Germany’s robust backing for Ukraine, according to a statement late Thursday from the chancellor’s office in Berlin. He made clear that Germany supports Trump’s effort to end Russia’s war, while Trump congratulated Merz on his election as chancellor, according to the statement.
GERMANY/EU (MNI): Merz Meets w/EU & NATO Leaders for First Time
Newly-installed German Chancellor Friedrich Merz has just wrapped up a presser in Brussels alongside European Council President Antnio Costa following their meeting earlier this morning. He will then go on to talk with Commission President Ursula von der Leyen at 1030CET with a post-meeting presser at 1130CET (0530ET, 1030BST). After this, he meets with Parliament President Roberta Metsola at 1150CET with a presser at 1205CET (0605ET, 1105BST). Merz will then travel to NATO HQ in Brussels for talks with Secretary-General Mark Rutte, followed by a presser at 1330CET (0730CET, 1230BST)
FRANCE/POLAND (MNI): Leaders to Sign Treaty; Could Bring Poland Under Nuclear Umbrella
French President Emmanuel Macron will host Polish PM Donald Tusk in the eastern city of Nancy to sign the Franco-Polish Friendship Treaty, which intends to set the countries on the path towards security cooperation that could see Poland coming under France's 'nuclear umbrella'. As Bloomberg reports, the treaty "will include a pledge of mutual military assistance in an event of an armed conflict and defense industry cooperation."
EU (MNI): EU Mulls Easing Use of Securizations for Bank Liquidity Buffers
The European Commission is considering changes that would make it more appealing for banks to hold asset-backed securities as part of their emergency cash reserves. The move is part of a broader plan to revive Europe’s €1.2 trillion ($1.4 trillion) securitization market, which politicians hope can play a key role in financing areas like housing, energy, and defense.
CHINA (BBG): China Wage Data Goes Missing as Tariffs Imperil Millions of Jobs
One of China’s largest online recruitment platforms has quietly stopped providing wage data it’s compiled for at least a decade, making it more difficult to gauge the health of the world’s biggest labor market just as it comes under strain from US tariffs. Zhaopin Ltd. has yet to publish its reports on average wages companies offered to new hires in 38 key cities for the past two quarters. It’s previously released them regularly within the first month after each quarter ended. Beijing-based Zhaopin didn’t reply to a request for comment.
RBA (MNI EXCLUSIVE): RBA's Monetary Policy Dept. to Target Scenarios
MNI looks at what to expect from the RBA's new monetary policy department. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
THAILAND (BBG): Thai Central Bank Sees Limited Policy Room After Three Rate Cuts
Thailand’s central bank has limited “ammunition” after recent interest rate cuts, according to Governor Sethaput Suthiwartnarueput, who called for more targeted measures to shield Southeast Asia’s second-largest economy from the impact of US tariff. The Bank of Thailand is exploring additional measures, the timing of which will depend on the severity of the hit from US tariff on Thai exports, Sethaput told a briefing on Friday. The steps won’t be broad-based but focused on sectors in need of help, he said.
PERU (BBG): Peru Cuts Rate to 4.5% With Slow Inflation, Tariff Risks
Peru resumed monetary easing with inflation firmly under control and US tariffs posing mounting risks to its economy. The central bank cut its key rate to 4.5% from 4.75% on Thursday, as expected by five of 13 economists surveyed by Bloomberg. The other eight expected policymakers to hold rates steady for a fourth consecutive month. The central bank said in a statement that it expects both headline and core inflation to hover around 2% in coming months, which is the coveted midpoint of the central bank’s target band.
CORPORATE (BBG): TSMC April Sales Surge After US Tariffs Spur Device Rush Orders
Taiwan Semiconductor Manufacturing Co.’s revenue jumped 48% in April, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc. and Nvidia Corp. reported monthly sales of NT$349.6 billion ($11.6 billion). That compares with the average analysts’ estimate for a 38% rise in second-quarter revenue.
DATA
NORWAY DATA (MNI): Seasonally Adjusted April CPI-ATE Flat; Marginal Support for June Cut
- NORWAY APR CPI +0.7% M/M, +2.5% Y/Y
- NORWAY APR CORE CPI +0.5% M/M, +3% Y/Y
The Norwegian April inflation print will marginally support the case for a June cut, but there is too much time - and data- between now and June 19 to have much confidence in that view at this stage, particularly given Norges Bank's cautious stance. Seasonally adjusted CPI-ATE inflation was 0.00% in April, pulling 3m/3m inflation momentum down to 4.21% (vs 4.33% prior). Overall, seasonally weak food prices were offset by seasonally strong airfares - both a function of the timing of Easter. NSA CPI-ATE inflation was 3.0% Y/Y vs 3.4% prior, with analysts and Norges Bank expecting a 3.2% reading.
SWEDEN DATA (MNI): Household Consumption Looks to Have Supported Growth in Q1
Household consumption looks to have been a positive contributor to Q1 GDP growth, with 3m/3m consumption indicator growth at 0.7% in March (vs 1.0% prior). This is despite a notable pullback in consumer confidence in recent months. Private sector production saw sequential falls in each of January, February and March (latest -0.5% M/M vs -0.3% prior). The final Q1 GDP report is due on May 30, but more timely data for April (e.g. retail sales, household lending, unemployment and the May Economic
Tendency Indicator) will probably be more important to determine whether the Riksbank can cut rates in June.
CHINA DATA (MNI): China's April Exports Still Strong; Imports Catch Up
- CHINA APR TRADE SURPLUS +$96.18 BLN VS MEDIAN +$94.3 BLN
- CHINA APR EXPORTS +8.1% Y/Y VS MEDIAN +2.0% Y/Y
- CHINA APR IMPORTS -0.2% Y/Y VS MEDIAN -5.9% Y/Y
China's exports grew 8.1% y/y to USD315.69 billion in April following March's 12.4% increase, beating the 2.0% y/y consensus, according to data released by China Customs on Friday. The month-over-month growth recorded a 0.6% rise following March's strong 46.0% result, which was bolstered by exporters frontrunning tariffs. Imports registered a 0.2% decrease in April, narrowing from the prior month's 4.3% fall and higher than the 5.9% decrease forecasted by the market.
JAPAN DATA (MNI): Japan March Real Wage Stays in Negative
Inflation-adjusted real wages, a barometer of households' purchasing power, stayed in negative territory in March for the third straight month, down 2.1% vs. -1.5% in February, preliminary data released by the Ministry of Health, Labour and Welfare on Friday showed. Real wages, including imputed rents, a new measure recently released by the ministry, fell by 1.5% in March, a sharper decline than the 0.8% drop recorded in February. The year-on-year rise in total CPI minus imputed rents slowed to 4.2% in March from 4.3% in February. Total cash earnings, or nominal wages, rose 2.1% in March, slowing from 2.7% in February, while scheduled earnings rose 1.3%, flat over the month.
JAPAN DATA (MNI): Household Spending Above Forecasts But Diverges From Soft Wages
- JAPAN MARCH HOUSEHOLD SPENDING +2.1% Y/Y; FEB -0.5%
- JAPAN MARCH HOUSEHOLD SPENDING +0.4% M/M; FEB +3.5%
Japan March household spending data was much better than forecast, offsetting some of the negative impact of the lower labor earnings data. Real household spending rose 2.1%y/y, versus 0.2% forecast and -0.5% prior. In the month household spending rose 0.4%. Nominal spending was up 6.4% y/y, while nominal incomes rose 2.1%. Real incomes fell -2%y/y, consistent with the softer labor earnings data. Weakness in real labor earnings places a caveat on today's spending beat in the sense of whether or not the positive momentum can be sustained.
FOREX: Greenback Fades Off Highs, Providing Some Relief
- The USD is modestly softer ahead of the Friday crossover, but is still holding the bulk of yesterday's late rally. EUR/USD has held after a test on the $1.1200 level to the downside overnight, mimicking the price action in GBP/USD which sees a 50 pip bounce off the overnight lows.
- Markets continue to digest a busy Thursday, and are generally concluding that the UK-US trade deal marks the first step toward, rather than a conclusive end to, trade negotiations - meaning any forthcoming US agreements could be struck in a similar vein. Indian and Japanese deals are seen as the next most likely candidates.
- NZD is among the poorest performers early Friday, with NZD/USD ending a consolidative phase to resolve lower. The pair has shown below the 200-dma of 0.5882 and a close below the mark would be the first since October last year. An easier outlook for RBNZ policy ahead (Westpac added a further 25bps cut to their rate profie overnight) and a return higher for the USD is broadly responsible - but price action will likely look ahead to looming US-China trade talks for conviction here.
- Canada's jobs report is the key data release Friday, but it's the Fed speaker schedule that should keep markets busier. Fed's Barr, Kugler, Williams, Barkin, Goolsbee and Waller are all set to make appearances - the first real Fedspeak we'll have received in around two weeks outside of Powell's Wednesday press conference. BoE's Pill should also prove interesting - he is set to deliver the national MPC agent's briefing after being among the minority voting for unchanged BoE rates at the meeting this week.
EGBS: Bunds Shown Signs of Stabilising, But 50-day EMA Pierced
After catching up to yesterday’s weakness in US Treasuries, Bund futures have shown tentative signs of intraday stabilisation. Futures are -73 ticks at 130.44, just off session lows of 130.38. Initial support at the 50-day EMA (130.60) has been pierced though, and a clear breach of this average would signal an extension of the current corrective pullback, with sights on 129.92 (Apr 11 low).
- Bond weakness has been driven by optimism surrounding the trade outlook, with focus on meetings between the US and China this weekend. Over the medium-term it is worth remembering that tariffs on China would need to come down significantly from current levels to make any trade with the US economical. Even targeted levels of around 60% may be too high.
- The German curve has steepened, with 2s10s up 3bps to 79bps.
- 10-year EGB spreads to Bunds are mixed, with semi-core paper a touch tighter to Bunds and peripherals somewhat wider. We think it may be difficult for the 10-year BTP/Bund spread to see further tightening towards the 100bp handle without meaningful progress on US-EU trade deals.
- This morning has seen dovish ECBspeak from Rehn and Simkus, consistent with previous remarks in late April.
GILTS: Holding Near Lows, Cross-Market Cues Dominate, BoE Speak Eyed
Gilt futures hold near lows, with increased optimism surrounding Sino-U.S. trade talks applying pressure to core global FI markets, alongside driving an uptick in European equities and crude oil prices.
- Futures as low as 92.07, breaching the May 6 low (92.32). Deeper extension would target the April 17 low (91.73) and post greater threat to the bullish trend. Contract 92.20 last.
- Yields little changed to 4.5bp higher, 30s lead the sell off.
- 10s spread vs. Bunds steady at ~200bp.
- BoE-dated OIS prices ~5bp of cuts for June, despite Bailey noting that he is open-minded when it comes to the outcome at that meeting.
- ~58bp of cuts are priced through year-end, with implied rates over that horizon ~15bp less dovish than what was priced pre-BoE yesterday.
- There hasn’t been much in the way of market moving comments from BoE Governor Bailey. One of the more interesting developments in his speech saw him point to an evolution in the BoE’s forecasts, which are set to become staff-led going forwards (akin to the ECB). This could make it harder to interpret the readthrough for BoE policy.
- Bailey also suggested that a 50bp cut yesterday would have been disproportionate with the domestic inflation picture.
- Bailey continues to speak at typing, while comments from BoE chief economist/hawkish dissenter Pill (MPC agency briefing at 12:40 London) are also eyed.
EQUITIES: Eurostoxx 50 Futures Remain in Bull Cycle Following Latest Advance
Eurostoxx 50 futures remain in a bull cycle. The contract traded to a fresh short-term cycle high on Thursday, reinforcing bullish conditions. Note too that price has traded through 5263.01, 76.4% of the Mar 3 - Apr 7 bear leg. A continuation higher would signal scope for a climb towards 5341.00 next, the Mar 27 high. Initial support to watch lies at 5110.14, the 20-day EMA. Clearance of this level would signal a possible reversal. The bullish trend condition in S&P E-Minis remains unchanged. The contract has recently breached the 50-day EMA, at 5626.70. A continuation higher would expose 5837.25 next, the Mar 25 high and a bull trigger. It is still possible that the entire rally since Apr 7 is a correction. A reversal lower would signal the end of this corrective phase and expose initially, support at 5127.25, the Apr 21 low. First support to watch is 5560.62, the 20-day EMA.
- Japan's NIKKEI closed higher by 574.7 pts or +1.56% at 37503.33 and the TOPIX ended 34.77 pts higher or +1.29% at 2733.49.
- Elsewhere, in China the SHANGHAI closed lower by 9.997 pts or -0.3% at 3341.999 and the HANG SENG ended 91.82 pts higher or +0.4% at 22867.74.
- Across Europe, Germany's DAX trades higher by 133.99 pts or +0.57% at 23485.72, FTSE 100 higher by 38.03 pts or +0.45% at 8569.08, CAC 40 up 45.61 pts or +0.59% at 7739.65 and Euro Stoxx 50 up 19.91 pts or +0.38% at 5308.86.
- Dow Jones mini down 53 pts or -0.13% at 41415, S&P 500 mini up 2.75 pts or +0.05% at 5686.75, NASDAQ mini up 37 pts or +0.18% at 20183.5.
Time: 09:50 BST
COMMODITIES: Recent Pullback in Gold Considered Technically Corrective
A downtrend in WTI futures remains intact and short-term gains are considered corrective. The move down that started Apr 23 signals the end of the correction between Apr 9 - 23. That cycle higher allowed an oversold condition to unwind. For bears, a move lower would refocus attention on $54.67, the Apr 9 low and a bear trigger. Clearance of this level would resume the downtrend. Key resistance to watch is $63.72, the 50-day EMA. The latest pullback in Gold appears corrective. The primary trend condition is bullish and a resumption of the bull cycle would signal scope for a climb towards the bull trigger at $3500.1, the Apr 22 high. Clearance of this level would confirm a resumption of the uptrend. Key short-term support has been defined at $3202.0, the May 1 low. A break of this level is required to signal scope for a deeper retracement.
- WTI Crude up $0.81 or +1.35% at $60.72
- Natural Gas up $0.06 or +1.59% at $3.648
- Gold spot up $20.05 or +0.61% at $3326.16
- Copper down $1.5 or -0.33% at $458.85
- Silver up $0.11 or +0.35% at $32.588
- Platinum up $5.11 or +0.52% at $989.53
Time: 09:50 BST
| Date | GMT/Local | Impact | Country | Event |
| 09/05/2025 | 0955/0555 |  US | Fed Governor Michael Barr | |
| 09/05/2025 | 1045/0645 | US | Fed Governor Adriana Kugler | |
| 09/05/2025 | 1115/1215 |  GB | BOE's Pill At National MPC Agency Briefing | |
| 09/05/2025 | 1230/0830 | *** |  CA | Labour Force Survey |
| 09/05/2025 | 1230/0830 | US | New York Fed's John Williams | |
| 09/05/2025 | 1230/0830 | *** | CA | Labour Force Survey |
| 09/05/2025 | 1230/0830 | US | Richmond Fed's Tom Barkin | |
| 09/05/2025 | 1235/0835 | US | New York Fed's Roberto Perli | |
| 09/05/2025 | 1530/1130 | US | Fed Governor Christopher Waller | |
| 09/05/2025 | 1530/1130 | US | New York Fed's John Williams | |
| 09/05/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 09/05/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 09/05/2025 | 2345/1945 | US | St. Louis Fed's Alberto Musalem | |
| 09/05/2025 | 2345/1945 | US | Fed Governor Michelle Bowman | |
| 10/05/2025 | 2345/0145 |  EU | ECB's Schnabel on Monetary Policy Panel | |
| 09/05/2025 | 2345/1945 | US | Cleveland Fed's Beth Hammack | |
| 09/05/2025 | 2345/1945 | US | Fed Governor Lisa Cook | |
| 10/05/2025 | 0130/0930 | *** |  CN | CPI |
| 10/05/2025 | 0130/0930 | *** | CN | Producer Price Index |
