US: Trump Aides Exploring More Limited Universal Tariff Plan, WAPO
The Washington Post reports that US President-elect Donald Trump’s aides are "exploring plans" to apply tariffs to every country “but only cover critical imports” – a step removed from Trump’s more hardline campaign proposal to impose a 10-20% universal baseline tariff on all imports.
- The report suggests that Trump’s initial tariff plan may track relatively closely with the Biden administration’s targeted tariffs, which already applies duties on Chinese imports in sectors deemed critical to national security or subject to “anticompetitive and non-market” practices.
- The Post writes: “Preliminary discussions have largely focused on several key sectors [including] the defense industrial supply chain (through tariffs on steel, iron, aluminum and copper); critical medical supplies (syringes, needles, vials and pharmaceutical materials); and energy production (batteries, rare earth minerals and even solar panels)”.
- As tariffs already cover Chinese imports on many of the above items, market focus will be on potential exceptions for allied countries that run a trade surplus with Washington, including Japan, South Korea, and Germany - and on how robustly Trump will approach closing backdoor routes to US markets via lower-tariff countries.
- A source told WaPo: “The sector-based universal tariff is a little bit easier for everybody to stomach out the gate... why not at least start with these targeted measures? And it would still give CEOs a massive incentive to start making their products here.”
- A Trump spokesperson said in a statement: “As he did in his first term, [Trump] will implement economic and trade policies to make life affordable and more prosperous for our nation.”
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MNI UST Issuance Deep Dive: Dec 2024 (2/2)
Throughout November’s policy and market volatility, though, Treasury auctions largely impressed, with 5 of 7 nominal coupon sales trading through.
- Auction Results: November’s nominal coupon auctions were generally strong, with five out of seven auctions trading-through, of which four saw a positive reading on MNI’s Relative Strength Indicator (RSI). The remaining two auctions; 3 and 20-year auctions tailed. See page 2.
- Upcoming Supply: Issuance resumes next week with sales of $58B in 3Y Note, $39B in 10Y Note (reopen), and $22B in 30Y Bond (reopen). December is set to see $15B in nominal Treasury coupon sales, in addition to $22B in 5Y TIPS and $28B FRN for a total of $365B – slightly below the Oct and Nov totals of $369B which were joint-highest since Oct 2021.
- MNI's review includes a calendar of upcoming auctions and buyback operations.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: Dec 2024 (1/2)
MNI's latest US Treasury Issuance Deep Dive has just been published (PDF link here):
November proved a dramatic month for Treasuries. Yields were volatile before and after the Nov 5 election - after ending October at 4.28%, 10Y yields peaked at five-and-a-half-month high just above 4.50% mid-month before closing November just below 4.18%, as markets attempted to price in the implications of a Republican “sweep”.
- Also buffeting rates was speculation over the would-be successor to Treasury Secretary Yellen. President-elect Trump’s selection of hedge fund manager Scott Bessent was greeted with bull flattening in the curve, implying perhaps that he’s seen as more cautious on fiscal deficits than some of the alternatives (he has expressed support for halving the annual budget shortfall to 3% of GDP).
- The first quarterly Refunding process of Bessent’s Treasury is in early February, by which point we may start to have a better sense of the incoming administration’s approach to both fiscal policy and to more issuance-specific considerations such as duration management.
- Bessent for instance has argued that Yellen’s Treasury erred from a risk management perspective by boosting short-duration issuance, and there are suggestions he would be in favor of reversing course, telling Bloomberg in June “When rates are very low, you should extend duration…I think it’s very unfortunate what Secretary Yellen’s doing. She’s financing at the front end, and she’s making a bet on the carry trade, which is not good risk management.”
US LABOR MARKET: MNI US Employment Insight: Soft Enough To Keep Fed Cutting
Our latest Employment Insight has just been published and emailed to subscribers.
