US-CHINA: Trump Threatens To Withdraw From Meeting w/Xi And Increase Tariffs 2/2
Oct-10 15:47
MNI London: The new Chinese rare earth export control measures are scheduled to take effect on December 1. Starting November 8, Beijing will also restrict exports of equipment needed to manufacture batteries for electric cars in a bid to protect the competitiveness of Chinese autos, per The New York Times.
- In the past week, the US and China have also announced tit-for-tat port fees and levies. The Chinese measure, itself a retaliation for a US port fee on Chinese ships, is scheduled to take effect on October 14, per Bloomberg.
- The rapid escalation of tensions could be interpreted as posturing ahead of the Trump-Xi talks, which were also expected to include a parallel fifth round of talks between Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng at the APEC Summit in South Korea, October 31-November 1.
- Bessent said last week that talks in Seoul “should show a pretty big breakthrough,” but criticised China for leveraging the purchase of US agricultural products as a bargaining chip ahead of the summit. Agricultural exports are a sensitive political issue, which primarily impacts Republican states, like that of Senate Majority Leader John Thune's (R-SD) home state of South Dakota. Trump's Agriculture Secretary, Brook Rollins, is readying a farm bailout package reportedly aroun USD$10-15 billion.
- Bessent said, “It’s unfortunate the Chinese leadership has decided to use the American farmers, soybean farmers, in particular, as a hostage or pawn in the trade negotiations.”
- Trump is likely to address the developments during an unrelated Oval Office announcement at 17:00 ET 22:00 BST.
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US: Trump Statement On Russian Drone Incursion Offers Few Clues On Response
Sep-10 15:41
US President Donald Trump's cryptic first statement on the overnight Russian drone incursion into Polish airspace has offered few clues on the US response. "What’s with Russia violating Poland’s airspace with drones? Here we go!," Trump wrote on Truth Social.
- In the wake of the post, Polymarket registered a spike (27% to 39%) in the implied probability of Trump imposing new sanctions on Russia, likely inferring an acceleration of Trump's recent pivot away from Russia.
- A White House spokesperson told reporters earlier Trump plans to hold talks with Polish President Karol Nawrocki later today. The call comes after Trump pledged to maintain US military personnel in Poland during a White House meeting with Nawrocki last week.
- The drone incursion will add weight to Kyiv's dual requests for fresh sanctions on Russia and additional military aid. As a coordinated US-EU sanctions package is likely to be bogged down by the need for EU unanimity, a package of military aid from Washington could be a more effective lever for Trump to apply pressure on Russian President Vladimir Putin.
- The most pressing need for Ukraine is additional missile defence systems and interceptors, both of which are under significant supply constraints in Europe and are critical to repelling a sustained Russian aerial bombardment on Ukrainian cities and infrastructure.
- Capping a frantic day of NATO diplomacy, Polish PM Donald Tusk, Ukrainian President Volodymyr Zelenskyy, French President Emmanuel Macron, NATO Secretary General Mark Rutte, Italian PM Giorgia Meloni, and UK PM Keir Starmer convened for a call a short time ago.
FED: US TSY 17W BILL AUCTION: HIGH 3.850%(ALLOT 55.20%)
Sep-10 15:32
- US TSY 17W BILL AUCTION: HIGH 3.850%(ALLOT 55.20%)
- US TSY 17W BILL AUCTION: DEALERS TAKE 30.87% OF COMPETITIVES
- US TSY 17W BILL AUCTION: DIRECTS TAKE 5.49% OF COMPETITIVES
- US TSY 17W BILL AUCTION: INDIRECTS TAKE 63.64% OF COMPETITIVES
- US TSY 17W BILL AUCTION: BID/CVR 3.26
MACRO ANALYSIS: Macro Developments Since Last ECB: General Resilience
Sep-10 15:20
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- Developments over the summer have done little to push back on Lagarde's relatively hawkish signalling at the July press conference.
- Economic indicators such as the PMIs continue to gradually improve, the unemployment rate is at all-time lows, and inflation remains very close to the 2.0% medium-term target albeit with core still a little above target.
- The main takeaway is one of general resilience amidst trade policy induced uncertainty.
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