Connecting Global Markets and Policy
Persian Daric – First Global Reserve Currency. Guaranteed 95.83% purity gold. Introduced by Darius I the Great, 521 – 486 BC. In circulation until 330 BC defeat of the Persian Achaemenid Empire by Alexander the Great of Macedonia.
SGH Macro Advisors produces concise, forward-looking proprietary reports on the major central banks and on key economic and policy developments that drive global bond, equity, and currency markets.
Founded in 2009, SGH has over the years built a reputation as a thought leader and source of well-informed, cutting-edge information, analysis, and insight on policy and financial markets. Its briefings and reports are highly valued by many of the world’s most well-known and influential hedge funds, money managers, and policymakers.
Highlights
SGH reports are highly valued for keeping clients and policymakers informed and well-ahead of market consensus.
June 24, 2025
SGH Insight
Bottom Line: The Fed isn’t cutting in July. It may be cutting in September, and there are two paths to that cut, lower inflation or a weaker labor market. We think market participants should also be looking at the possibility of a 50bp cut in September, especially if Waller and Bowman are correct in their assessment that a July cut should be very much on the table.
Market Validation
Bloomberg 6/26/25
A flurry of Federal Reserve officials this week made clear they’ll need a few more months to gain confidence that tariff-driven price hikes won’t raise inflation in a persistent way.
Fed Governors Christopher Waller and Michelle Bowman captured attention in the past week when they signaled they’d be open to lowering rates as soon as the Fed’s July 29-30 meeting if inflation remains contained.
Since then, however, nearly a dozen policymakers — including Chair Jerome Powell, New York Fed President John Williams and San Francisco Fed chief Mary Daly — have dumped cold water on that idea.
A flurry of Federal Reserve officials this week made clear they’ll need a few more months to gain confidence that tariff-driven price hikes won’t raise inflation in a persistent way.
Fed Governors Christopher Waller and Michelle Bowman captured attention in the past week when they signaled they’d be open to lowering rates as soon as the Fed’s July 29-30 meeting if inflation remains contained.
Since then, however, nearly a dozen policymakers — including Chair Jerome Powell, New York Fed President John Williams and San Francisco Fed chief Mary Daly — have dumped cold water on that idea.
June 22, 2025
SGH Insight
We can envision a scenario where Iran’s response is a token and limited strike against US regional interests, reminiscent of Iran’s response to Trump’s first term elimination of Revolutionary Guard and Qods force commander Qasem Soleimani in January of 2020. Then, Iran fired at alert and prepared US bases, with no fatalities, and thus no need for an escalatory spiral beyond a slap down in return from the United States.
For those same reasons, we think there is nothing to gain, and a lot to lose, for Iran’s Ayatollah Khamenei and the Iranian Revolutionary Guards Corps to mine or attack the Straits of Hormuz, dragging the region and rest of the world against Iran, and destroying the shreds that are left of Iran’s economy. That is not conducive to regime survival, and we suspect the operative mood in Tehran is to “make it stop” and limp back after some more military back and forth to the negotiating table. If they can.
Market Validation
For those same reasons, we think there is nothing to gain, and a lot to lose, for Iran’s Ayatollah Khamenei and the Iranian Revolutionary Guards Corps to mine or attack the Straits of Hormuz, dragging the region and rest of the world against Iran, and destroying the shreds that are left of Iran’s economy. That is not conducive to regime survival, and we suspect the operative mood in Tehran is to “make it stop” and limp back after some more military back and forth to the negotiating table. If they can.
Bloomberg 6/23/25
Iran fired missiles at a US air base in Qatar in retaliation for President Donald Trump’s weekend airstrikes on three of its nuclear facilities.
Qatar said the barrage at Al Udeid base, the biggest such US facility in the Middle East, was intercepted and that there were no casualties. Al Udeid is the regional headquarters for US Central Command, which oversees the American military in the Middle East. There are about 9,000 US service members in gas-rich Qatar, which sits just across the Persian Gulf from Iran.
Oil prices fell immediately after the attack, with Brent dropping 3.3% to $74.48 a barrel as of 6:10 p.m.
@farnazfassihi
Journalist
@nytimes
United Nations Bureau Chief Iran Mideast Diplomacy | Author | War correspondent
Three Iranian officials familiar with the plans said that Iran gave advanced notice to Qatari officials that attacks were coming, as a way to minimize casualties. The officials said Iran symbolically needed to strike back at the U.S. but at the same time carry it out in a way that allowed all sides an exit ramp; they described it as a similar strategy to 2020 when Iran gave Iraq heads up before firing ballistic missiles an American base in Iraq following the
assassination of its top general.
Iran fired missiles at a US air base in Qatar in retaliation for President Donald Trump’s weekend airstrikes on three of its nuclear facilities.
Qatar said the barrage at Al Udeid base, the biggest such US facility in the Middle East, was intercepted and that there were no casualties. Al Udeid is the regional headquarters for US Central Command, which oversees the American military in the Middle East. There are about 9,000 US service members in gas-rich Qatar, which sits just across the Persian Gulf from Iran.
Oil prices fell immediately after the attack, with Brent dropping 3.3% to $74.48 a barrel as of 6:10 p.m.
@farnazfassihi
Journalist
@nytimes
United Nations Bureau Chief Iran Mideast Diplomacy | Author | War correspondent
Three Iranian officials familiar with the plans said that Iran gave advanced notice to Qatari officials that attacks were coming, as a way to minimize casualties. The officials said Iran symbolically needed to strike back at the U.S. but at the same time carry it out in a way that allowed all sides an exit ramp; they described it as a similar strategy to 2020 when Iran gave Iraq heads up before firing ballistic missiles an American base in Iraq following the
assassination of its top general.
June 17, 2025
SGH Insight
We find it highly implausible that Israel will refrain from attacks on Iran’s underground Fordow enrichment facility to allow nuclear negotiations to resume between the Islamic Republic and United States, despite signals that have been allegedly sent through “Arab” intermediaries (read, Oman) that Iran wants to de-escalate and resume talks.
Furthermore, we think it very likely that US President Donald Trump will authorize American B-2 bombers being lined up in the Diego Garcia military base to drop the 30,000-pound GBU-57 bunker busting ordnances required to destroy Fordow, as opposed to leaving Israel to go it alone with an extended bombing campaign with less powerful bunker busters and commando raids to achieve that objective.
Market Validation
Furthermore, we think it very likely that US President Donald Trump will authorize American B-2 bombers being lined up in the Diego Garcia military base to drop the 30,000-pound GBU-57 bunker busting ordnances required to destroy Fordow, as opposed to leaving Israel to go it alone with an extended bombing campaign with less powerful bunker busters and commando raids to achieve that objective.
Bloomberg 6/22/25
US President Donald Trump said American
bombers struck Iran’s three main nuclear sites, pulling the US
directly into the country’s conflict despite his longtime
promises to avoid new wars.
Trump said a “payload of BOMBS” was dropped on Fordow, the
uranium-enrichment site buried deep under a mountain and seen as
vulnerable only to “bunker buster” munitions that the US
possesses. Natanz and Isfahan, two other sites, were also
struck.
US President Donald Trump said American
bombers struck Iran’s three main nuclear sites, pulling the US
directly into the country’s conflict despite his longtime
promises to avoid new wars.
Trump said a “payload of BOMBS” was dropped on Fordow, the
uranium-enrichment site buried deep under a mountain and seen as
vulnerable only to “bunker buster” munitions that the US
possesses. Natanz and Isfahan, two other sites, were also
struck.
June 6, 2025
SGH Insight
Fully cognizant it cannot afford to wait and see if deflation worsens and with the tail wind of a persistently strong Swiss franc, the Swiss National Bank (SNB) has little option but to cut rates by 25 bps to 0% at its policy meeting on June 19.
The SNB could consider a 50bps cut, as it did back in December when it surprised markets and indeed, markets are pricing some odds for that outcome. However, we think the Board is reluctant to take the policy rate back into negative territory just yet.
Market Validation
The SNB could consider a 50bps cut, as it did back in December when it surprised markets and indeed, markets are pricing some odds for that outcome. However, we think the Board is reluctant to take the policy rate back into negative territory just yet.
Bloomberg 6/20/25
The Swiss National Bank cut its interest rate to zero and signaled it’s ready to go further if necessary as it seeks to deter investors from pushing up the franc.
The quarter-point reduction is the SNB’s sixth consecutive move and was forecast by most of the economists surveyed by Bloomberg after the currency’s strength caused consumer prices to drop for the first time in four years. A minority had anticipated an even bigger half-point step.
The Swiss National Bank cut its interest rate to zero and signaled it’s ready to go further if necessary as it seeks to deter investors from pushing up the franc.
The quarter-point reduction is the SNB’s sixth consecutive move and was forecast by most of the economists surveyed by Bloomberg after the currency’s strength caused consumer prices to drop for the first time in four years. A minority had anticipated an even bigger half-point step.
April 11, 2025
SGH Insight
Regarding US treasuries, according to a well-placed source in China, in repeating warnings (or less graciously, threats) that both the US stock and bond markets could face additional turbulence if the trade war with China were to continue to escalate,Beijing has already started to “dump a small part” of its US bond holdings.
Over the years, we have heard many threats at times of heightened tension from Beijing over selling their US bond holdings, only to be tempered by reality (blowback, market size, currency effects, etc.), even as the very gradual, long-term objective and process of rebalancing away from the US remains intact.
In reading the current situation, however, we would give this comment a bit more credence, most notably for how it is phrased, “a small part,” which can be read not as the usual chest thumping threats from hawkish quarters, but more as an “attention grabber” for Washington.
Market Validation
Over the years, we have heard many threats at times of heightened tension from Beijing over selling their US bond holdings, only to be tempered by reality (blowback, market size, currency effects, etc.), even as the very gradual, long-term objective and process of rebalancing away from the US remains intact.
In reading the current situation, however, we would give this comment a bit more credence, most notably for how it is phrased, “a small part,” which can be read not as the usual chest thumping threats from hawkish quarters, but more as an “attention grabber” for Washington.
Bloomberg 6/18/25
Japan, the biggest foreign holder of Treasuries, saw its holdings tick up by $3.7 billion in April, to $1.13 trillion. China, which in March slipped to become the No. 3 foreign holder, behind the UK, had $757 billion of Treasuries in April, down $8.2 billion from the previous month. Belgium, whose holdings include Chinese custodial accounts according to market analysts, went up by $8.9 billion, to $411 billion.
Japan, the biggest foreign holder of Treasuries, saw its holdings tick up by $3.7 billion in April, to $1.13 trillion. China, which in March slipped to become the No. 3 foreign holder, behind the UK, had $757 billion of Treasuries in April, down $8.2 billion from the previous month. Belgium, whose holdings include Chinese custodial accounts according to market analysts, went up by $8.9 billion, to $411 billion.
June 1, 2025
SGH Insight
The Fed is positioned to hold rates constant until at least September. FOMC participants are in no rush to adjust policy rates, content to remain on the sidelines as they monitor threats to both sides of their mandate. Indeed, New York Federal Reserve President John Williams made it clear that July is as of now, off the table:
“It’s not going to be that in June we’re going to understand what’s happening here, or in July,” Williams said Monday at a conference organized by the Mortgage Bankers Association. “It’s going to be a process of collecting data, getting a better picture, and watching things as they develop.”
Market Validation
“It’s not going to be that in June we’re going to understand what’s happening here, or in July,” Williams said Monday at a conference organized by the Mortgage Bankers Association. “It’s going to be a process of collecting data, getting a better picture, and watching things as they develop.”
Bloomberg - 6/18/25
Two-year bonds have pared their initial gains as Federal Reserve Chair Jerome Powell speaks. He’s been emphatic that the US economy is pretty strong and that the full impact of tariffs hasn’t been felt yet and won’t be for months. The central bank may not move away from restrictive rates as long as the economy remains solid, he said. Meantime, as long as inflation keeps coming down and employment remains strong, there’s no urgency to move. All that being said, Powell indicated the path for rates in the dot plot are very low conviction.
Two-year bonds have pared their initial gains as Federal Reserve Chair Jerome Powell speaks. He’s been emphatic that the US economy is pretty strong and that the full impact of tariffs hasn’t been felt yet and won’t be for months. The central bank may not move away from restrictive rates as long as the economy remains solid, he said. Meantime, as long as inflation keeps coming down and employment remains strong, there’s no urgency to move. All that being said, Powell indicated the path for rates in the dot plot are very low conviction.
June 15, 2025
SGH Insight
Main event will be the June FOMC with Wednesday’s release of the statement, SEP and press conference. We expect the SEP to reflect a more pronounced supply shock with slower growth and higher inflation and unemployment.
We anticipate minimal changes to the FOMC statement. There is generally a high bar to changing the statement and we think that FOMC participants remain comfortable with the “hold steady” path they have carved out and believe it is too early to shift gears to a new narrative. That said, there is room for some wordsmithing of this paragraph:
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.
Uncertainty has not increased further since the May FOMC meeting, and arguably the willingness of the Trump administration to course correct after the spring’s market meltdown has lessened uncertainty, although not enough to alleviate the concerns addressed in the final sentence of the above quote.
Market Validation
We anticipate minimal changes to the FOMC statement. There is generally a high bar to changing the statement and we think that FOMC participants remain comfortable with the “hold steady” path they have carved out and believe it is too early to shift gears to a new narrative. That said, there is room for some wordsmithing of this paragraph:
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.
Uncertainty has not increased further since the May FOMC meeting, and arguably the willingness of the Trump administration to course correct after the spring’s market meltdown has lessened uncertainty, although not enough to alleviate the concerns addressed in the final sentence of the above quote.
Wall Street Journal 6/18/25
Federal Reserve officials lowered their projections for U.S. economic growth this year and raised their outlook for inflation in their latest economic projections out Wednesday.
Bloomberg 6/18/25
The statement removes language noting that the committee “judges that the risks of higher unemployment and higher inflation have risen.” Fed says uncertainty about the economic outlook has “diminished but remains elevated”
Federal Reserve officials lowered their projections for U.S. economic growth this year and raised their outlook for inflation in their latest economic projections out Wednesday.
Bloomberg 6/18/25
The statement removes language noting that the committee “judges that the risks of higher unemployment and higher inflation have risen.” Fed says uncertainty about the economic outlook has “diminished but remains elevated”
June 10, 2025
SGH Insight
The Bank of Japan (BOJ) next week looks set to announce plans to slow tapering of its bond purchases for the upcoming fiscal year to mitigate ongoing disruption to its bond market.
The widely anticipated move at its June 16-17 meeting – part of a scheduled review of the BOJ’s tapering strategy from April 2026 onward – is intended to calm markets and ease yields in super-long Japanese Government Bonds (JGB) which have hit record highs recently and raised concerns over Japan’s deteriorating public finances.
Domestic Japanese media is tipping the Bank will halve the size of its quarterly reductions to 200 billion yen a quarter from 400 billion yen, beginning in April next year and running through March of 2027.
Market Validation
The widely anticipated move at its June 16-17 meeting – part of a scheduled review of the BOJ’s tapering strategy from April 2026 onward – is intended to calm markets and ease yields in super-long Japanese Government Bonds (JGB) which have hit record highs recently and raised concerns over Japan’s deteriorating public finances.
Domestic Japanese media is tipping the Bank will halve the size of its quarterly reductions to 200 billion yen a quarter from 400 billion yen, beginning in April next year and running through March of 2027.
Bloomberg 6/17/25
The Bank of Japan unveiled a plan to step
back from the bond market at a slower pace from next year to
ensure market stability while sticking to a path of
normalization that includes the possibility of more rate hikes.
Governor Kazuo Ueda’s policy board stood pat on its
benchmark policy rate of 0.5% at the end of a two-day meeting
Tuesday. In a widely expected move the central bank said it
would ease the pace of its cuts to monthly bond purchases from
the next fiscal year to quarterly reductions of ¥200 billion
($1.34 billion) from the current ¥400 billion.
The Bank of Japan unveiled a plan to step
back from the bond market at a slower pace from next year to
ensure market stability while sticking to a path of
normalization that includes the possibility of more rate hikes.
Governor Kazuo Ueda’s policy board stood pat on its
benchmark policy rate of 0.5% at the end of a two-day meeting
Tuesday. In a widely expected move the central bank said it
would ease the pace of its cuts to monthly bond purchases from
the next fiscal year to quarterly reductions of ¥200 billion
($1.34 billion) from the current ¥400 billion.
May 29, 2025
SGH Insight
A surprise spike in Canada’s key underlying inflation measures have likely given the Bank of Canada (BOC) pause in contemplating whether to cut rates again next week even though the direction for short term rates remains down.
The reversal in prices complicates the BOC’s task to keep providing support to its softening economy and will test BOC Governor Tiff Macklem’s recent insistence that ultimately, the Bank must ensure confidence in price stability.
In our last report, (see SGH 5/6/25; “BOC: Trade Talks Keep Rate Cut In Play), we argued the Bank would need to ease another 75 bps this year to offset a potential recession and that remains our base case.
But the prospect of a near term June 4 cut looks iffy now given the inflation data and the Bank’s current strategy to be less preemptive with rate moves, less forward looking but pledge to act decisively once an economic direction is more obvious.
Market Validation
The reversal in prices complicates the BOC’s task to keep providing support to its softening economy and will test BOC Governor Tiff Macklem’s recent insistence that ultimately, the Bank must ensure confidence in price stability.
In our last report, (see SGH 5/6/25; “BOC: Trade Talks Keep Rate Cut In Play), we argued the Bank would need to ease another 75 bps this year to offset a potential recession and that remains our base case.
But the prospect of a near term June 4 cut looks iffy now given the inflation data and the Bank’s current strategy to be less preemptive with rate moves, less forward looking but pledge to act decisively once an economic direction is more obvious.
Dow Jones -- OTTAWA 6/4/25
The Bank of Canada on Wednesday left its main interest
rate unchanged, at 2.75%, saying the economy has softened but not
deteriorated, and inflation has picked up steam.
Bank of Canada Gov. Tiff Macklem said senior officials expect second-growth
output to be "much weaker" after a surprise 2.2% annualized increase in the
first quarter, which was buoyed by exports and inventories as companies rushed
to purchase goods to avoid tariffs. While there was a consensus among senior
officials on the central bank's governing council to keep the interest rate
steday, Macklem said officials also agreed that another rate cut might be
needed should the economy stall due to uncertainty fueled by U.S. trade
policy.
The Bank of Canada on Wednesday left its main interest
rate unchanged, at 2.75%, saying the economy has softened but not
deteriorated, and inflation has picked up steam.
Bank of Canada Gov. Tiff Macklem said senior officials expect second-growth
output to be "much weaker" after a surprise 2.2% annualized increase in the
first quarter, which was buoyed by exports and inventories as companies rushed
to purchase goods to avoid tariffs. While there was a consensus among senior
officials on the central bank's governing council to keep the interest rate
steday, Macklem said officials also agreed that another rate cut might be
needed should the economy stall due to uncertainty fueled by U.S. trade
policy.
May 21, 2025
SGH Insight
Different ECB officials have differing views on where the neutral rate dividing line into accommodative territory might lie, with most estimates around 2%, and all can agree that it is a range and not a point estimate. But in the real economy, there is no data on the transmission and credit side to indicate that even the current 2.25% deposit rate level is restricting economic activity in any meaningful way.
In other words, the evidence reinforces that we are already in that neutral range. Under this setup, unless clearly needed, deeper cuts into a 1% handle would come with diminishing returns and take valuable policy space for a more significant downside demand shock should that materialize. Therefore, as things stand, the rate path from here should be seen as a one or two cut risk management exercise to mitigate a potential temporary undershooting of inflation, rather than a response to deeper slowdown and undershoot concerns which would necessitate more forceful easing.
Market Validation
In other words, the evidence reinforces that we are already in that neutral range. Under this setup, unless clearly needed, deeper cuts into a 1% handle would come with diminishing returns and take valuable policy space for a more significant downside demand shock should that materialize. Therefore, as things stand, the rate path from here should be seen as a one or two cut risk management exercise to mitigate a potential temporary undershooting of inflation, rather than a response to deeper slowdown and undershoot concerns which would necessitate more forceful easing.
Dow Jones 5/27/25
The European Central Bank is unlikely to lower its key interest rate below 1.5% or in large steps, its chief economist said in an interview published Tuesday.
The ECB last month lowered its key rate for a seventh time since June 2024 to 2.25%. Policymakers will meet next week and investors expect them to cut again, to 2%.
In an interview with German newspaper Frankfurter Allgemeine Zeitung conducted on May 20, Philip Lane said that further cuts are likely if policymakers see signs of a further declines in inflation, which has fallen close to the 2% target.
"If we see signs of further falling inflation, we will respond with further interest rate cuts--but the range of discussion is not that wide: no one is talking about dramatic rate cuts," he said.
However, Lane said there is a limit to how far the ECB would likely go in lowering borrowing costs to support the economy and lift inflation, unless there is a significant weakening of the eurozone economy.
"Rates below 1.5 per cent are clearly accommodative," he said. "Going there would only be appropriate in the event of more substantial downside risks to inflation, or a more significant slowdown in the economy. I do not see that at the moment."
The European Central Bank is unlikely to lower its key interest rate below 1.5% or in large steps, its chief economist said in an interview published Tuesday.
The ECB last month lowered its key rate for a seventh time since June 2024 to 2.25%. Policymakers will meet next week and investors expect them to cut again, to 2%.
In an interview with German newspaper Frankfurter Allgemeine Zeitung conducted on May 20, Philip Lane said that further cuts are likely if policymakers see signs of a further declines in inflation, which has fallen close to the 2% target.
"If we see signs of further falling inflation, we will respond with further interest rate cuts--but the range of discussion is not that wide: no one is talking about dramatic rate cuts," he said.
However, Lane said there is a limit to how far the ECB would likely go in lowering borrowing costs to support the economy and lift inflation, unless there is a significant weakening of the eurozone economy.
"Rates below 1.5 per cent are clearly accommodative," he said. "Going there would only be appropriate in the event of more substantial downside risks to inflation, or a more significant slowdown in the economy. I do not see that at the moment."
May 23, 2025
SGH Insight
In a classic central bank “catch 22,” the latest market ructions have stalled BOJ rate hikes for the time being, after the Bank warned earlier this month that global trade unrest and tariffs forced it to downgrade its growth forecasts for 2025 and 2026. On May 1, the central bank held rates unchanged at 0.5% and extended its timeline for hitting its 2% inflation “sustainably”.
But the BOJ will have to hike in the next few months. The steepening yield curve is tightening monetary conditions for the BOJ, at a time when households and firms already are under pressure from higher inflation and stubbornly stagnant real incomes. Market pricing is telling the BOJ that it needs to raise rates to contain inflation, even if that conflicts with Ministry of Finance’s (MOF) desire to minimize the cost of financing Japan’s debt.
That said, the BOJ will stand pat again at its June meeting and likely will want to see market liquidity conditions improving and a few better auction results before it will be willing to hike again.
Market Validation
But the BOJ will have to hike in the next few months. The steepening yield curve is tightening monetary conditions for the BOJ, at a time when households and firms already are under pressure from higher inflation and stubbornly stagnant real incomes. Market pricing is telling the BOJ that it needs to raise rates to contain inflation, even if that conflicts with Ministry of Finance’s (MOF) desire to minimize the cost of financing Japan’s debt.
That said, the BOJ will stand pat again at its June meeting and likely will want to see market liquidity conditions improving and a few better auction results before it will be willing to hike again.
Bloomberg 5/27/25
Bank of Japan Governor Kazuo Ueda gave the yen a boost by clearly indicating his intention to continue raising the benchmark interest rate if the economy improves as expected.
“We will adjust the degree of monetary easing as needed” to ensure that the bank achieves its sustainable price goal if incoming data give authorities greater confidence that their economic expectations will be met, Ueda said in a speech at an international conference hosted by the BOJ in Tokyo Tuesday.
The yen rose as high as 142.12 against the dollar shortly after his remarks.
Bank of Japan Governor Kazuo Ueda gave the yen a boost by clearly indicating his intention to continue raising the benchmark interest rate if the economy improves as expected.
“We will adjust the degree of monetary easing as needed” to ensure that the bank achieves its sustainable price goal if incoming data give authorities greater confidence that their economic expectations will be met, Ueda said in a speech at an international conference hosted by the BOJ in Tokyo Tuesday.
The yen rose as high as 142.12 against the dollar shortly after his remarks.
May 23, 2025
SGH Insight
Markets have been slammed this morning by Trump’s threat to hike tariffs on the European Union to 50%. That tweet reflects intense frustration in Washington at the slow, combative, and lecturing tone from the EU on tariff negotiations. Here is the state of play, and at the end, a brief quick take on market implications.
We have repeatedly flagged the EU position on tariff negotiations as a problem, despite news articles touting optimism and so on.
Looking forward, and in the spirit of constructive feedback to European policymakers, we would suggest that the EU consider pulling a political heavyweight into tariff negotiations to reinforce the European Commission chiefs who have limited instructions, and in Treasury Secretary Scott Bessent’s words, suffer from “a collective action problem.”
The natural candidate for that would of course be EC President Ursula von der Leyen.
Market Validation
We have repeatedly flagged the EU position on tariff negotiations as a problem, despite news articles touting optimism and so on.
Looking forward, and in the spirit of constructive feedback to European policymakers, we would suggest that the EU consider pulling a political heavyweight into tariff negotiations to reinforce the European Commission chiefs who have limited instructions, and in Treasury Secretary Scott Bessent’s words, suffer from “a collective action problem.”
The natural candidate for that would of course be EC President Ursula von der Leyen.
Bloomberg 5/26/25
President Donald Trump said he would extend the deadline for the European Union to face 50% tariffs until July 9 after a phone call with Commission President Ursula von der Leyen.
“We had a very nice call and I agreed to move it,” Trump told reporters Sunday at Morristown Airport in New Jersey on his way back to Washington.
Von der Leyen, who heads the EU’s executive arm, said earlier Sunday in a post on X that “Europe is ready to advance talks swiftly and decisively,” but “a good deal” will need “time until July 9.” That’s the date that Trump’s 90-day pause of his so-called reciprocal tariffs had originally been set to end.
President Donald Trump said he would extend the deadline for the European Union to face 50% tariffs until July 9 after a phone call with Commission President Ursula von der Leyen.
“We had a very nice call and I agreed to move it,” Trump told reporters Sunday at Morristown Airport in New Jersey on his way back to Washington.
Von der Leyen, who heads the EU’s executive arm, said earlier Sunday in a post on X that “Europe is ready to advance talks swiftly and decisively,” but “a good deal” will need “time until July 9.” That’s the date that Trump’s 90-day pause of his so-called reciprocal tariffs had originally been set to end.
News and Events
SGH Macro Advisors hosts occasional roundtables and events for clients and senior policymakers.