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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.
May 7, 2025
SGH Insight
Steady as She Goes
Bottom Line: The Fed is stuck in place until it has greater clarity on the impacts of tariffs and the direction of the economy. We think the Fed’s next move will be to cut rates, but it’s a timing game. The economy will likely continue to cool more slowly than market participants have feared. If that remains the case, the Fed will continue to delay rate cuts. From our perspective, it is more likely that a preponderance of evidence to support a rate cut can build by the September rather than July FOMC meeting. The Fed would also have the luxury of using Jackson Hole to reset the narrative ahead of any rate change. This could be shaping up just like 2024.
Market Validation
Bottom Line: The Fed is stuck in place until it has greater clarity on the impacts of tariffs and the direction of the economy. We think the Fed’s next move will be to cut rates, but it’s a timing game. The economy will likely continue to cool more slowly than market participants have feared. If that remains the case, the Fed will continue to delay rate cuts. From our perspective, it is more likely that a preponderance of evidence to support a rate cut can build by the September rather than July FOMC meeting. The Fed would also have the luxury of using Jackson Hole to reset the narrative ahead of any rate change. This could be shaping up just like 2024.
Wall Street Journal 5/12/25
A near-term cut to benchmark interest rates looks less likely after a thawing in trade relations between the U.S. and China.
-- There is now a 57% chance the Federal Reserve holds rates steady through its next two meetings, CME FedWatch data shows.
-- That's up from 40% as of Friday, according to the data, which is based on futures tied to the fed-funds rate.
A near-term cut to benchmark interest rates looks less likely after a thawing in trade relations between the U.S. and China.
-- There is now a 57% chance the Federal Reserve holds rates steady through its next two meetings, CME FedWatch data shows.
-- That's up from 40% as of Friday, according to the data, which is based on futures tied to the fed-funds rate.
May 4, 2025
SGH Insight
As the Federal Reserve heads into its May FOMC meeting this week the economic outlook remains mired in uncertainty. The Trump Administration’s lack of clarity on both the timing and magnitude of trade policy changes is weighing on firms’ and households’ sentiment, raising their inflation expectations, and delaying their longer-term decisions. Still, the hard data, while backward looking, remains solid, leading to the tension or current disconnect with the deteriorating soft data. The Fed will not change policy rates at this week’s meeting as it faces the challenge of managing a shock that is pulling on both sides of its mandate.
We frequently get the question “will Powell kill June?” It’s rare that Powell explicitly prejudges a meeting outcome; he almost always leaves a caveat about the data. He could repeat Waller’s guidance about waiting for July tariff news, which by default would imply no June. Or Powell could say that participants did not discuss the timing of any potential rate changes, which would also suggest that the Fed did not intend to cut rates in June. Ultimately, regardless of the exact language, Powell will dissuade market participants from expecting a June rate cut.
Market Validation
We frequently get the question “will Powell kill June?” It’s rare that Powell explicitly prejudges a meeting outcome; he almost always leaves a caveat about the data. He could repeat Waller’s guidance about waiting for July tariff news, which by default would imply no June. Or Powell could say that participants did not discuss the timing of any potential rate changes, which would also suggest that the Fed did not intend to cut rates in June. Ultimately, regardless of the exact language, Powell will dissuade market participants from expecting a June rate cut.
Bloomberg 5/7/25
Federal Reserve officials held interest rates steady for a third-straight meeting and emphasized they see a growing risk of both higher inflation and rising unemployment.
“Uncertainty about the economic outlook has increased further,” the Federal Open Market Committee said in a statement Wednesday at the conclusion of a two-day meeting in Washington. “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.”
Bloomberg 5/7/25
The US dollar rose more than 0.4% to a session high and the Japanese yen fell close to 1% after Federal Reserve Chair Jerome Powell downplayed prospects of monetary easing.
BBDXY advanced as much as 0.43% and USD/JPY rose as much as 0.93% to a high of 143.78; both have since trimmed gains
Powell said in Q&A session that there’s no need to adjust rates “in a hurry” and the central bank doesn’t see progress on its price goals this year “if tariffs stay”
Federal Reserve officials held interest rates steady for a third-straight meeting and emphasized they see a growing risk of both higher inflation and rising unemployment.
“Uncertainty about the economic outlook has increased further,” the Federal Open Market Committee said in a statement Wednesday at the conclusion of a two-day meeting in Washington. “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.”
Bloomberg 5/7/25
The US dollar rose more than 0.4% to a session high and the Japanese yen fell close to 1% after Federal Reserve Chair Jerome Powell downplayed prospects of monetary easing.
BBDXY advanced as much as 0.43% and USD/JPY rose as much as 0.93% to a high of 143.78; both have since trimmed gains
Powell said in Q&A session that there’s no need to adjust rates “in a hurry” and the central bank doesn’t see progress on its price goals this year “if tariffs stay”
May 1, 2025
SGH Insight
The details of tomorrow’s employment report could in the Fed’s eye sharply reduce chances for a June rate cut. As we have laid out in previous reports, Fed speakers have coalesced around a “hold steady” policy stance as rising risks to the inflation and employment sides of the mandate have an ambiguous impact on the appropriate path for policy rates. Fed speakers have implied they don’t expect to cut interest rates in the first half of this year, and Federal Reserve Governor Chris Waller offered unusually direct guidance about June by saying the Fed expects it needs to see the final tariff schedule before cutting rates and that will not arrive until July. That’s like saying “not June.”
Market Validation
Bloomberg 5/2/25
Treasuries fell after stronger-than-expected US employment data that showed tariff uncertainty has yet to materially hit the nation’s jobs market, prompting traders to trim bets on imminent interest-rate cuts.
The yield on two-year notes rose as much as seven basis points to 3.77% after non-farm payrolls rose 177,000, above all estimates compiled by Bloomberg. Traders cut bets on the Federal Reserve’s rate reductions, pricing in around 85 basis points of total easing this year, compared to around 90 basis points before the report.
Treasuries fell after stronger-than-expected US employment data that showed tariff uncertainty has yet to materially hit the nation’s jobs market, prompting traders to trim bets on imminent interest-rate cuts.
The yield on two-year notes rose as much as seven basis points to 3.77% after non-farm payrolls rose 177,000, above all estimates compiled by Bloomberg. Traders cut bets on the Federal Reserve’s rate reductions, pricing in around 85 basis points of total easing this year, compared to around 90 basis points before the report.
April 30, 2025
SGH Insight
Meanwhile, the BOJ, which began its two-day policy meeting on Tuesday, is all but certain to hold rates at 0.50% and downgrade its growth expectations due to tariff impacts on the economy. Governor Kazuo Ueda will deliver a press conference on May 1, when he is expected to emphasize that tariffs have clouded the outlook for future hikes.
While we continue to view the BOJ as likely to move rates higher this year, the Bank clearly has been sidelined for now.
Market Validation
While we continue to view the BOJ as likely to move rates higher this year, the Bank clearly has been sidelined for now.
Bloomberg 5/1/25
The Bank of Japan left its benchmark rate
unchanged while pushing back the timing for when it expects to
reach its inflation target amid intensified uncertainties due to
US tariff measures.
Governor Kazuo Ueda’s board maintained the central bank’s
policy rate at 0.5% at the end of the two-day gathering,
according to a statement, as expected by all 54 economists
surveyed by Bloomberg.
The BOJ said it expects inflation to be consistent with its
2% goal around the second half of its outlook period, which was
extended by a year to include fiscal 2027. The bank halved its
economic growth projection to 0.5% for this fiscal year in a
sign of heightened caution following the US levies.
The Bank of Japan left its benchmark rate
unchanged while pushing back the timing for when it expects to
reach its inflation target amid intensified uncertainties due to
US tariff measures.
Governor Kazuo Ueda’s board maintained the central bank’s
policy rate at 0.5% at the end of the two-day gathering,
according to a statement, as expected by all 54 economists
surveyed by Bloomberg.
The BOJ said it expects inflation to be consistent with its
2% goal around the second half of its outlook period, which was
extended by a year to include fiscal 2027. The bank halved its
economic growth projection to 0.5% for this fiscal year in a
sign of heightened caution following the US levies.
April 21, 2025
SGH Insight
Finance Minister Lan Fo’an and Central Bank Governor Pan Gongsheng plan to go to Washington to attend the Spring Meetings of the World Bank and IMF and will also attend the meeting of BRICS Finance Ministers and Central Bank Governors. We note that US Treasury Secretary Scott Bessent has expressed [a] desire to talk to his Chinese counterpart during the Spring Meetings. It is certain that Lan and Pan both are not authorized to talk to the US on trade and tariffs but will bring back messages from the US side if the Trump side takes the initiative to talk.
Market Validation
Bloomberg 4/23/25
President Donald Trump said he plans to be “very nice” to China in any trade talks and that tariffs will drop if the two countries can reach a deal, a sign he may be backing down from his tough stance on Beijing amid market volatility.
“It will come down substantially but it won’t be zero,” Trump said Tuesday in Washington, following earlier comments from Treasury Secretary Scott Bessent that the standoff was unsustainable.
Foreign Ministry spokesman Guo Jiakun said “the door for talks is wide open,” at a regular press briefing in Beijing on Wednesday, reiterating that trade wars don’t have any winners. While Trump has repeatedly sought to get Xi on the phone, China wants the two sides to work out the contours of an agreement before the leaders speak.
Beijing has sent People’s Bank of China Governor Pan Gongsheng, his deputy, Xuan Changneng, and Finance Minister Lan Fo’an to Washington, which this week will host meetings of the World Bank Group and International Monetary Fund. That could create an opening for top Chinese and American officials to exchange views and open the door to trade talks.
President Donald Trump said he plans to be “very nice” to China in any trade talks and that tariffs will drop if the two countries can reach a deal, a sign he may be backing down from his tough stance on Beijing amid market volatility.
“It will come down substantially but it won’t be zero,” Trump said Tuesday in Washington, following earlier comments from Treasury Secretary Scott Bessent that the standoff was unsustainable.
Foreign Ministry spokesman Guo Jiakun said “the door for talks is wide open,” at a regular press briefing in Beijing on Wednesday, reiterating that trade wars don’t have any winners. While Trump has repeatedly sought to get Xi on the phone, China wants the two sides to work out the contours of an agreement before the leaders speak.
Beijing has sent People’s Bank of China Governor Pan Gongsheng, his deputy, Xuan Changneng, and Finance Minister Lan Fo’an to Washington, which this week will host meetings of the World Bank Group and International Monetary Fund. That could create an opening for top Chinese and American officials to exchange views and open the door to trade talks.
March 6, 2025
SGH Insight
A cut at the European Central Bank’s next meeting in April to follow the 25bps cut in its benchmark deposit ratetoday to 2.5% is clearly a decision that is very much up in the air. But although today’s press conference from ECB President Christine Lagarde was, in being fully noncommittal on future moves, a bit more hawkish than we had expected, we still lean toward expecting two more 25bps rate cuts from the ECB in April and June, to take the deposit rate down to 2%.
Where we would adjust our previous assessment is that an April cut may no longer follow in response simply to data that affirms further confidence in hitting the ECB’s latest inflation forecast. Most notably, that would mean further affirmation of continued gradual disinflation in core and services, which we expect. Rather, the Governing Council may need just a bit more rattling on the trade front, or on signs of continued consumer retrenchment, to get consensus for two more back-to-back cuts. We do think that will be coming.
Market Validation
Where we would adjust our previous assessment is that an April cut may no longer follow in response simply to data that affirms further confidence in hitting the ECB’s latest inflation forecast. Most notably, that would mean further affirmation of continued gradual disinflation in core and services, which we expect. Rather, the Governing Council may need just a bit more rattling on the trade front, or on signs of continued consumer retrenchment, to get consensus for two more back-to-back cuts. We do think that will be coming.
AFP 4/17/25
The European Central Bank cut interest rates again Thursday amid fears that US President Donald Trump's stop-start tariff announcements could threaten growth across the eurozone.
ECB policymakers decided to lower the benchmark deposit rate by a quarter point for the sixth time in a row, leaving it at 2.25 percent.
The European Central Bank cut interest rates again Thursday amid fears that US President Donald Trump's stop-start tariff announcements could threaten growth across the eurozone.
ECB policymakers decided to lower the benchmark deposit rate by a quarter point for the sixth time in a row, leaving it at 2.25 percent.
March 21, 2025
SGH Insight
Despite all the uncertainty and the pullback in market pricing for cuts, we continue to lean toward another 25bps rate cut on April 17, from 2.5% to 2.25%, followed by a final cut to 2% on June 5.
If we were to have to choose between an April or June cut, we would lean to April as the cleaner and more logical choice, allowing the ECB to reassess at its next forecast round in June.
Market Validation
If we were to have to choose between an April or June cut, we would lean to April as the cleaner and more logical choice, allowing the ECB to reassess at its next forecast round in June.
Wall Street Journal 4/17/25
The European Central Bank cut interest rates to offset the economic blow of tariffs, drawing the attention of President Trump, who urged the Federal Reserve to follow suit.
The ECB on Thursday lowered its key interest rate to 2.25% from 2.5%, its seventh cut in eight meetings, taking borrowing costs to their lowest level since early 2023. U.S. tariffs are expected to erode already-weak economic growth in the bloc, where struggling auto, luxury goods and high-end food and beverage companies are reliant on exports to America.
The European Central Bank cut interest rates to offset the economic blow of tariffs, drawing the attention of President Trump, who urged the Federal Reserve to follow suit.
The ECB on Thursday lowered its key interest rate to 2.25% from 2.5%, its seventh cut in eight meetings, taking borrowing costs to their lowest level since early 2023. U.S. tariffs are expected to erode already-weak economic growth in the bloc, where struggling auto, luxury goods and high-end food and beverage companies are reliant on exports to America.
March 31, 2025
SGH Insight
The Reserve Bank of Australia (RBA) will hold off on a March rate cut but likely tilt guidance toward a May easing using language as it starts to rebalance the Bank’s inflation concern with downside growth risk.
As is the case for a number of central banks, inflation and growth risks are now pulling in different directions, posing the likelihood the RBA will need to shift more clearly to protecting downside growth risks over the next several months.
We see the Bank cutting 25 bps in May and August 12 to around 3.50%, with the risk of another move in the second half of the year (see SGH 12/2/25; “RBA: Hawkish Cut, Shallow Path”). While that may be sufficient to buffer economic growth, the Bank will become increasingly attuned to the risk of a softer second half of the year amid ongoing trade fallout.
Market Validation
As is the case for a number of central banks, inflation and growth risks are now pulling in different directions, posing the likelihood the RBA will need to shift more clearly to protecting downside growth risks over the next several months.
We see the Bank cutting 25 bps in May and August 12 to around 3.50%, with the risk of another move in the second half of the year (see SGH 12/2/25; “RBA: Hawkish Cut, Shallow Path”). While that may be sufficient to buffer economic growth, the Bank will become increasingly attuned to the risk of a softer second half of the year amid ongoing trade fallout.
Bloomberg 4/15/25
The RBA flagged that a move may come as soon as next month. By the May 19-20 meeting, the board will have
additional data on the labor market, inflation, household spending, a fresh set of staff forecasts as well as “further
information about the likely evolution of global trade policies,” the minutes showed. “Collectively, this information
would have a considerable bearing” on the decision, it said.
The RBA flagged that a move may come as soon as next month. By the May 19-20 meeting, the board will have
additional data on the labor market, inflation, household spending, a fresh set of staff forecasts as well as “further
information about the likely evolution of global trade policies,” the minutes showed. “Collectively, this information
would have a considerable bearing” on the decision, it said.
April 14, 2025
SGH Insight
China’s National Bureau of Statistics (NBS) will release Q1 2025 GDP data tonight US Eastern time, Tuesday morning local time with press conference to follow at 10:00 am. The release is expected by markets to register a solid 5.2% annualized growth rate, from 5.4% in Q4 2024 and 5.3% in Q1 2024.
As is customary, last Thursday, April 10, nine economic departments provided their own estimates for GDP to China’s State Council. These ranged from 5.0% to 5.4% and were clustered around 5.2% and 5.3%.
While these estimates are not typically perfect indicators for the actual data release, the NDRC, China’s economic planning agency, edged toward the higher side, at 5.3%, and we find it plausible that among other things the front loading of exports ahead of US tariffs may have helped boost the numbers to the higher side of the range.
Market Validation
As is customary, last Thursday, April 10, nine economic departments provided their own estimates for GDP to China’s State Council. These ranged from 5.0% to 5.4% and were clustered around 5.2% and 5.3%.
While these estimates are not typically perfect indicators for the actual data release, the NDRC, China’s economic planning agency, edged toward the higher side, at 5.3%, and we find it plausible that among other things the front loading of exports ahead of US tariffs may have helped boost the numbers to the higher side of the range.
Bloomberg 4/16/25
China’s economy showed surprising strength in early 2025 thanks to consumer subsidies and a rush of export shipments to beat tariffs, although an impasse with Donald Trump over the trade war is darkening its outlook and fueling calls for stimulus.
China’s gross domestic product grew 5.4% in the first quarter from a year ago, the government said Wednesday, more than a forecast of 5.2%. Both production and consumption indicated unexpected momentum in March, before massive US levies on Chinese goods kicked in this month.
China’s economy showed surprising strength in early 2025 thanks to consumer subsidies and a rush of export shipments to beat tariffs, although an impasse with Donald Trump over the trade war is darkening its outlook and fueling calls for stimulus.
China’s gross domestic product grew 5.4% in the first quarter from a year ago, the government said Wednesday, more than a forecast of 5.2%. Both production and consumption indicated unexpected momentum in March, before massive US levies on Chinese goods kicked in this month.
April 13, 2025
SGH Insight
The week begins with Federal Reserve Governor Chris Waller. Waller’s message of late has leaned dovish, focusing on his expectations for continued disinflation and eventually rate cuts. The March inflation data reinforces this view as it matches his suspicion that residual seasonality accounts for high inflation in January and February. Moreover, Waller has emphasized that tariffs are not inflationary though, importantly, he already conceded that the impact depends on size and implementation.
The Fed is locked in place. Fed speakers have stepped up the message that the focus now is on maintaining stable inflation expectations, and the underlying message is that effort could require rate hikes. At a minimum, the Fed doesn’t expect to change policy until the second half. Market participants, however, are not hearing that message yet; we think Powell will try to drive the point home this week. Volatile markets have not stopped the Fed from delivering that message. It’s looking like the Trump administration has ignited what amounts to an existential battle for a Fed that very well knows the mistakes of the 1970s.
Market Validation
The Fed is locked in place. Fed speakers have stepped up the message that the focus now is on maintaining stable inflation expectations, and the underlying message is that effort could require rate hikes. At a minimum, the Fed doesn’t expect to change policy until the second half. Market participants, however, are not hearing that message yet; we think Powell will try to drive the point home this week. Volatile markets have not stopped the Fed from delivering that message. It’s looking like the Trump administration has ignited what amounts to an existential battle for a Fed that very well knows the mistakes of the 1970s.
New York Times 4/14/25
In a speech on Monday, Christopher J. Waller laid out two scenarios that may play out for Mr. Trump’s tariffs, which the Fed governor described as “one of the biggest shocks to affect the U.S. economy in many decades.” How these levies impact both inflation and growth will impact how soon the Fed can again lower interest rates.
If a recession appears to be taking shape, Mr. Waller said he would support the Fed cutting interest rates “sooner and to a greater extent” than initially expected.
The first scenario Mr. Waller laid out assumes that the average tariff imposed on U.S. imports remains around its current level of 25 percent for an extended period. The second assumes a more modest 10 percent universal tariff, as other levies are removed over time.
In both cases, Mr. Waller argued, the effects on inflation would not persist so long as expectations about future price pressures remained under control.
Bloomberg 4/16/25
Federal Reserve Chair Jerome Powell again stressed the central bank's focus on preventing potential tariff-driven price hikes from triggering a more persistent rise in inflation.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said Wednesday in the text of a speech prepared for the Economic Club of Chicago.
Powell said policymakers would balance their dual responsibilities of fostering maximum employment and stable prices, “keeping in mind that, without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans.”
The remarks reinforce a message Powell has repeatedly emphasized, including most recently on April 4: Fed officials are in no hurry to change the central bank’s benchmark policy rate.
As they seek greater certainty about how President Donald Trump’s economic policies, especially on trade, will affect the US economy, Powell and other Fed policymakers have expressed support for holding rates steady.
“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said.
In a speech on Monday, Christopher J. Waller laid out two scenarios that may play out for Mr. Trump’s tariffs, which the Fed governor described as “one of the biggest shocks to affect the U.S. economy in many decades.” How these levies impact both inflation and growth will impact how soon the Fed can again lower interest rates.
If a recession appears to be taking shape, Mr. Waller said he would support the Fed cutting interest rates “sooner and to a greater extent” than initially expected.
The first scenario Mr. Waller laid out assumes that the average tariff imposed on U.S. imports remains around its current level of 25 percent for an extended period. The second assumes a more modest 10 percent universal tariff, as other levies are removed over time.
In both cases, Mr. Waller argued, the effects on inflation would not persist so long as expectations about future price pressures remained under control.
Bloomberg 4/16/25
Federal Reserve Chair Jerome Powell again stressed the central bank's focus on preventing potential tariff-driven price hikes from triggering a more persistent rise in inflation.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said Wednesday in the text of a speech prepared for the Economic Club of Chicago.
Powell said policymakers would balance their dual responsibilities of fostering maximum employment and stable prices, “keeping in mind that, without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans.”
The remarks reinforce a message Powell has repeatedly emphasized, including most recently on April 4: Fed officials are in no hurry to change the central bank’s benchmark policy rate.
As they seek greater certainty about how President Donald Trump’s economic policies, especially on trade, will affect the US economy, Powell and other Fed policymakers have expressed support for holding rates steady.
“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said.
April 10, 2025
SGH Insight
According to Beijing, the head of China’s trade and economic team (at the director-general level) has already received a call from his counterpart on the US side to hold ministerial-level talks with the US. But Beijing has rejected talks for now, repeating China’s three-point position to the American counterpart.
Xi will pay a state visit to Vietnam, Malaysia, and Cambodia starting next Monday (April 14) with an intent to sign a series of economic, trade and investment cooperation agreements with the three countries.
Market Validation
Xi will pay a state visit to Vietnam, Malaysia, and Cambodia starting next Monday (April 14) with an intent to sign a series of economic, trade and investment cooperation agreements with the three countries.
CNN 4/11/25
As the rest of the world received a 90-day respite, Trump escalated tariffs on China, saying the US will now charge an extra 145% on all Chinese goods that arrive in the US. In response, Beijing ratcheted up its own tariffs on American goods Friday to 125%, and the country’s leader — who Trump is urgently working to engage — warned China was “not afraid” of a prolonged trade conflict.
In private discussions hours before China announced new retaliatory tariffs, the Trump administration warned Chinese officials against such a move, according to a source familiar with the discussions.
The Chinese were also told – once again – that Chinese President Xi Jinping should request a call with US President Donald Trump.
BEIJING - Reuters 4/11/25
Chinese President Xi Jinping begins a three-nation tour of Southeast Asia next week, his first overseas trip this year, aiming to consolidate ties with some of China's closest neighbours as trade tension escalates with the United States.
Xi will visit Vietnam from April 14 to 15, and Malaysia and Cambodia from April 15 to 18, state-run Xinhua news agency said on Friday, after the Chinese president pledged this week to deepen "all-round cooperation" with China's neighbours.
As the rest of the world received a 90-day respite, Trump escalated tariffs on China, saying the US will now charge an extra 145% on all Chinese goods that arrive in the US. In response, Beijing ratcheted up its own tariffs on American goods Friday to 125%, and the country’s leader — who Trump is urgently working to engage — warned China was “not afraid” of a prolonged trade conflict.
In private discussions hours before China announced new retaliatory tariffs, the Trump administration warned Chinese officials against such a move, according to a source familiar with the discussions.
The Chinese were also told – once again – that Chinese President Xi Jinping should request a call with US President Donald Trump.
BEIJING - Reuters 4/11/25
Chinese President Xi Jinping begins a three-nation tour of Southeast Asia next week, his first overseas trip this year, aiming to consolidate ties with some of China's closest neighbours as trade tension escalates with the United States.
Xi will visit Vietnam from April 14 to 15, and Malaysia and Cambodia from April 15 to 18, state-run Xinhua news agency said on Friday, after the Chinese president pledged this week to deepen "all-round cooperation" with China's neighbours.
April 9, 2025
SGH Insight
With the focus rapidly shifting to tax cuts, this 10% baseline will now provide Treasury and Congress some certainty around a floor for potential tariff revenue raise with which to push negotiations along between the Senate and House Republicans. As opposed to most media and Washington analysts, we expect these to proceed quickly.
Market Validation
Bloomberg 4/10//25
President Donald Trump’s drive to enact trillions of dollars in tax cuts and raise the federal debt is on track after he and congressional leaders successfully corralled House Republican lawmakers to approve a Senate-passed budget outline.
The 216-214 vote on the budget — which outlines the parameters for the tax cut and debt ceiling increase — was delayed a day so Trump and Republican congressional leaders could assuage a dissident group of conservative spending hawks pressing for deeper cuts in safety-net programs.
The president worked the holdouts by phone and in a White House meeting. House Speaker Mike Johnson held a press conference to declare himself “committed” to coming up with at least $1.5 trillion in spending cuts. And Senate Republican leader John Thune joined the speaker to announce “a lot of” Republican senators shared the goal, though he stopped short of a commitment.
It was enough.
With the budget approved, the way is open for a follow-on package to cut taxes by up to $5.3 trillion over a decade and raise the debt ceiling by $5 trillion, in exchange for $4 billion in spending cuts. Republicans can now pass Trump’s tax-cut agenda solely on GOP votes, bypassing the need for negotiations with Democrats.
President Donald Trump’s drive to enact trillions of dollars in tax cuts and raise the federal debt is on track after he and congressional leaders successfully corralled House Republican lawmakers to approve a Senate-passed budget outline.
The 216-214 vote on the budget — which outlines the parameters for the tax cut and debt ceiling increase — was delayed a day so Trump and Republican congressional leaders could assuage a dissident group of conservative spending hawks pressing for deeper cuts in safety-net programs.
The president worked the holdouts by phone and in a White House meeting. House Speaker Mike Johnson held a press conference to declare himself “committed” to coming up with at least $1.5 trillion in spending cuts. And Senate Republican leader John Thune joined the speaker to announce “a lot of” Republican senators shared the goal, though he stopped short of a commitment.
It was enough.
With the budget approved, the way is open for a follow-on package to cut taxes by up to $5.3 trillion over a decade and raise the debt ceiling by $5 trillion, in exchange for $4 billion in spending cuts. Republicans can now pass Trump’s tax-cut agenda solely on GOP votes, bypassing the need for negotiations with Democrats.
News and Events
SGH Macro Advisors hosts occasional roundtables and events for clients and senior policymakers.