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.

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.

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.

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.

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."

Bloomberg 5/19/25
Federal Reserve Bank of New York President John Williams said policymakers may need months to get a better understanding of the outlook for the economy.
“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.”
Williams continued to stress that uncertainty was hindering not only policymakers, but also firms and households as they struggle to predict how tariffs and other policies from the Trump administration will reshape the US economy.

Bloomberg 5/22/25

US and Japanese finance chiefs confirmed
existing currency views and did not discuss foreign exchange
levels during a meeting in Canada, sending the yen briefly lower
as markets wound back expectations for a more aggressive stance.
Treasury Secretary Scott Bessent and Japanese Finance
Minister Katsunobu Kato “reaffirmed their shared belief that
exchange rates should be market determined and that, at present,
the dollar-yen exchange rate reflects fundamentals,” the
Treasury department said Wednesday.

Financial Review 5/20/25
The Reserve Bank of Australia has cut the cash rate to 3.85 per cent and
downgraded its key economic forecasts over concerns Donald Trump’s trade war
will cause consumers to save more and force businesses to rethink investment
plans.

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.

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”

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.

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.

Bloomberg News 5/12/25

The US and China will temporarily lower tariffs on each other’s products, according to a joint statement released in Geneva, in a move to cool trade tensions and give the world’s two largest economies three more months to resolve their differences.

The combined 145% US levies on most Chinese imports will be reduced to 30% including the rate tied to fentanyl by May 14, while the 125% Chinese duties on US goods will drop to 10%, according to the statement and officials in a briefing Monday.

“We had a very robust and productive discussion on steps forward on fentanyl,” Treasury Secretary Scott Bessent said. “We are in agreement that neither side wants to decouple.”

The statement also said “the parties will establish a mechanism to continue discussions about economic and trade relations.”

The announcement represents a step toward de-escalating a tariff war that has led to an immediate slump in trade across the Pacific Ocean. The two countries had earlier reported “substantial progress” in their talks, which buoyed markets and helped Chinese stocks recoup their losses since President Donald Trump’s “Liberation Day” announcement of tariffs on April 2.

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.

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.

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.

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.

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.

Traders Trim Bets for Fed Rate Cuts to Three by 2026
By Kristine Aquino
Bloomberg 4/9/25
Traders have promptly scaled back their expectations for Fed rate cuts by early 2026, and now see three quarter-point reductions by then. Prior to Trump’s announcement of a tariff reprieve, there were at least four such moves fully priced in, so the market is clearly taking the news as a reason to believe there’s less urgency for policymakers to act to support growth for now.

Bloomberg 4/9/25
President Donald Trump announced a 90-day pause on higher reciprocal tariffs that hit dozens of trade partners after midnight, while raising duties on China to 125%.
The president’s about-face comes roughly 13 hours after higher reciprocal duties on 56 nations and the European Union took effect, fueling market turmoil and stoking recession fears. Trump came under massive pressure from business leaders and investors to reverse course.
“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump posted Wednesday on social media.
Stocks surged the most since 2020 on Trump’s abrupt announcement, with the S&P 500 Index rising over 8%, with almost every company gaining, and the tech-heavy Nasdaq 100 jumping the most since 2008. Goldman Sachs Group Inc. economists rescinded their forecast for a US recession.
Countries that were hit with the higher, reciprocal duties that went into effect Wednesday will now be taxed at the earlier 10% baseline rate applied to other nations, with the exception of China, according to a White House official. Trump said that more than 75 countries had contacted his administration to negotiate on trade barriers and “have not, at my strong suggestion, retaliated in any way, shape, or form.”