TARIFFS: Trump Issues New Tariff Letters On Truth Social
US President Donald Trump has issued a raft of new tariff letters on his Truth Social account, imposing unilateral tariff rates on six trading partners. The letters target Algeria (30%), Libya (30%), Moldova (25%), Iraq (30%), Brunei (25%), and the Philippines (20%).
- The letters follow a nearly identical template to the tariff letters issued to 15 trading partners on Monday and Tuesday. They note that goods "transshipped" via the targeted country will be subject to the tariff of the origin country, widely understood to be directed at Chinese goods.
- As with the other tariff letters this week, today's letters state that implementation will take place on August 1, opening the door for negotiations to lower the tariff rate.
- While Algeria, Libya, Brunei, and Iraq all have large hydrocarbon sectors, Iraq is the only country on the list with a notable bilateral trade in oil with the United States.
- Today's rates are largely in line with the rate announced earlier this week, which ranged from 25% on Japan and South Korea to 40% on Laos and Myanmar.
- The Yale Budget Lab noted in an update on July 7, shortly after the first new tariff rate was released: “Consumers face an overall average effective tariff rate of 17.6%, the highest since 1934. After consumption shifts, the average tariff rate will be 16.5%, the highest since 1936.”
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US DATA: NY Fed: Consumers Less Pessimistic On Jobs, Finances (2/2)
The vast majority of Labor Market and Household Finance categories in the NY Fed's Survey of Consumer Expectations (SCE) improved in May, though many remain weaker compared with late 2024/early 2025 as tariff uncertainty appears to continue in respondents' minds.
- One-year ahead earnings growth expectations rose 0.2pp to 2.7%, not far from the 12-month average of 2.8%, while mean unemployment expectations (re the mean probability the US national unemployment rate will be higher in 1 year's time) fell 3.3pp to 40.8%, though that's still above the 37.7% 12-month average. It should be noted that this hasn't been a particularly effective series in predicting future unemployment rates, but is still useful as a gauge of current consumer sentiment.
- Respondents' mean probability of losing their job in the next 12 months also improved, falling 0.5pp to 14.8%, with the expected 12-month quits rate up 0.1pp to 18.3% - and the perceived probability of finding another job in 3 months (if respondents left the current job) rose 1.5pp to 50.7% (12m avg 52.2%).
- Against this backdrop, respondents were more optimistic (or at least, less pessimistic) on household finance prospects (current situations compared to a year ago and expectations about year ahead), with median expected household income growth up 0.1pp to 2.7% (albeit below the 12m avg 3.0%), perceived credit access improving, and lower perceived probability of missing a minimum debt payment.
- Expectations of higher equity prices no doubt helped here too after the May stock recovery: the mean perceived probability that stocks would be higher in 12 months rose to 36.3%, though that's below the 12-month average 38.7%.
- Perhaps the weakest aspect of the May report overall was that median nominal household spending growth expectations dipped 0.2pp to 5.0%, though that's above the trailing 12-month average of 4.9% and being a nominal figure it may simply reflect lower 1Y inflation expectations.
US 10YR FUTURE TECHS: (U5) Bearish Threat
- RES 4: 111-30 76.4% retracement of the May 1 - 22 downleg
- RES 3: 111-19+ 1.0% 10-dma envelope
- RES 2: 111-14+ High Jun 5 & 61.8% of the May 1 - 22 downleg
- RES 1: 110-20+ 50-day EMA
- PRICE: 110-05 @ 16:44 BST Jun 9
- SUP 1: 109-26 Low May 29
- SUP 2: 109-12+ Low May 22 and the bear trigger
- SUP 3: 109-09+ Low Apr 11 and key support
- SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing
The reversal in Treasury futures from last Thursday’s high, undermines a recent bullish theme. An extension would expose support at 109-26, the May 29 low, where a break would open key support and the bear trigger, at 109-12+, the May 22 low. Key short-term resistance has been defined at 111-14+, a Fibonacci retracement and the Jun 5 high. A break of this hurdle would be bullish.
OPTIONS: Larger FX Option Pipeline
- EUR/USD: Jun11 $1.1400(E2.0bln); Jun12 $1.1350(E1.9bln), $1.1395-00(E1.3bln), $1.1425-35(E1.3bln), $1.1440-50(E2.6bln), $1.1500(E2.2bln); Jun13 $1.1400-05(E1.6bln)
- USD/JPY: Jun11 Y144.90-00($1.0bln); Jun12 Y143.85-00($1.0bln); Jun13 Y144.00($1.2bln)
- AUD/USD: Jun12 $0.6475-85(A$1.1bln)
