Gold (XAUUSD) & Silver Price Forecast: XAU Eyes $3,346, XAG Awaits Breakout At $33.70

U.S. President Donald Trump said on Friday that he is recommending a straight 50% tariff on goods from the European Union starting on June 1, saying the EU has been hard to deal with on trade.

Stock markets across Europe fell sharply with the STOXX 600 index last down 1.8%, U.S. stock index futures moved sharply lower while the eurotrimmed its gains.

COMMENTS:

HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG, LONDON:

"This is a major escalation of trade tensions. With Trump you never know but this would be a major escalation. The EU would have to react and it is something that would really hurt the US and European economy. But Trump is highly volatile and I would not bet on this coming through."

GERRY FOWLER, HEAD OF EUROPEAN EQUITY STRATEGY, UBS, LONDON:

"The 10% tariff that Europe is currently experiencing was always going to be a best case scenario considering that’s what the UK was able to achieve anyway. So tariffs were likely to go up, they could obviously in the worst case scenario not only be 20% but potentially higher, but also cause retaliation against some of the Mag 7.

So this is much worse but it is also a bit like the China tariffs -probably not a sustainable tariff.

"Even the fact that he’s used the phrase “I recommend” suggests this is part of the late stage negotiation tactics. But if they’re even close to being implemented, then obviously Europe’s retaliation would be very significant so quite problematic."

FIONA CINCOTTA, SENIOR MARKET ANALYST, CITY INDEX, LONDON:

"The market was in this sense of perhaps there are going to be trade deals and worst case scenario is potentially being avoided after Liberation day and then there was that pause. But this latest threat is worse than the worst case scenario."

"We're seeing a big impact in equities in Germany particularly, because they're very much an export nation to the US, which will be impacted and so those companies are going to see profits hit, they're going to see revenue and margins hit. So we're seeing the this play out much more in the equities market than others."

Source: TradingView

President Donald Trump on Friday threatened to put a 25% tariff on Apple products unless iPhones are manufactured in the United States.

The threat delivered over social media could dramatically increase the price of iPhones, potentially hurting sales and the profits of one of America's leading technology companies. The company now joins Amazon, Walmart and other major companies as being in the White House's crosshairs as they try to respond to the uncertainty and inflationary pressures unleashed by the import taxes being imposed by Trump.

“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump posted on Truth Social. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”

Apple, led by CEO Tim Cook, in response to Trump's tariffs on China was looking to shift iPhone manufacturing to India as it adjusts supply chains. That plan has become a festering source of frustration for the U.S. president, who also brought it up last week during his Middle East trip.

Source: Yahoo Finance

President Donald Trump on Friday said he is "recommending a straight 50% Tariff on the European Union" after complaining that trade negotiations have stalled.

The steep new import duties would kick in in just over a week on June 1, Trump wrote on Truth Social.

The EU "has been very difficult to deal with," Trump wrote. "Our discussions with them are going nowhere!"

Source: CNBC

Bond investors are demanding more and more compensation to hold long-dated US debt as global markets grow anxious about the widening fiscal deficit in the world’s biggest economy.

The US 10-year term premium — or the extra return investors demand to own longer-term debt instead of a series of shorter ones — has climbed to near 1%, a level last seen in 2014. It’s a measure of how jittery investors are about plans to raise the scale of future borrowing.

The US’s funding challenges came into focus after Moody’s Ratings stripped the nation of its last top-tier credit score a week ago. That downgrade was followed by the US House of Representatives passing a multi-trillion dollar bill that extends President Donald Trump’s tax cuts, and weak demand for an auction of 20-year Treasuries.

“The danger for now is that this fiscal phenomenon feeds on itself,” said Ella Hoxha, head of fixed income at Newton Investment Management, in an interview with Bloomberg TV. “That should be somewhat of a concern, certainly for risky assets and certainly for policymakers as well, as they have to finance at much higher interest rates.”

US long-term borrowing costs surged this week, with the 30-year yield climbing to 5.15% — just shy of its highest level in nearly 20 years. The real rate for the same tenor — which is adjusted for inflation — closed at the most elevated level since 2008 on Wednesday.

The moves eased on Friday as the selloff attracted buyers, with Bank of America Corp.’s Michael Hartnett saying investors should take the opportunity to add long-dated Treasuries as the US government is likely to heed warnings from bond vigilantes to bring its debt under control. The 30-year yield traded just above 5% as of 11 a.m. in London, up for a fourth week.

Long-term bond yields have also risen elsewhere this week, with those in Japan climbing to the highest since records began in the late 1990s. Similar debt in the UK, Germany and Australia has also faced selling pressure.

Trump’s Next Hurdle: The Bond Market Hates His ‘Beautiful Bill’

It’s a reminder from markets that governments can’t keep borrowing at the pace they did when interest rates were close to zero, particularly since trade tensions and sticky inflation have diminished the probability that policymakers will dramatically ease monetary policy.

“This speaks to the ongoing degree of nervousness around the fiscal backdrop in the US, but also on a global level, where deficit concerns continue to play on the minds of market participants everywhere,” said Michael Brown, a strategist at Pepperstone. “Justifiably so, frankly, given that there seems little-to-no desire among governments to get a grip of the situation.”

Investors around the globe have been moving away from US assets since Trump unveiled high tariffs on trading partners. While some of those have since been scaled back, fund managers say there’s too much policy uncertainty.

Money managers from DoubleLine to PGIM have flagged the risk that long-term yields will keep rising, and even central banks have expressed their worries. On Friday, the governor of the Philippine central bank said the authority may consider reducing its holdings of US debt following the Moody’s downgrade.

Japanese bond markets were particularly hit by the latest selloff. That’s the result of the Bank of Japan scaling back its bond purchases as inflation accelerates, at the same time that traditional buyers like the nation’s life insurers fail to fill the gap left behind. Prime Minister Shigeru Ishiba said this week the nation’s financial conditions are worse than Greece’s.

Barclays Plc’s global chair of research Ajay Rajadhyaksha said Japan may consider asking government-owned entities to support the nation’s bond market if the selloff in longer-dated debt doesn’t abate. While this isn’t his base case and may not progress beyond an idea, in theory such a scenario could trigger sales of US Treasuries in order to pay for domestic bonds.

Strategists are widely discussing the broad implications of Japan’s bond rout for US Treasuries. Deutsche Bank AG warned the rising Japanese yields will make the notes more attractive to local buyers and so pose a threat to US debt. Albert Edwards, a global strategist at Societe Generale SA, said that while US bond and stock markets have previously benefited from money flowing from Japan, this may now be reversing.

“I would rank trying to understand and follow the surging long end of the JGB market as the No. 1 most important thing for investors at the moment,” Edwards wrote in a report to clients.

Source: Bloomberg Europe

The ongoing dispute over Iran’s nuclear ambitions is set to see another round of negotiations between Iranian and U.S. representatives this Friday in Rome.

This comes even as Tehran’s supreme leader cautioned that reaching a new agreement may be challenging due to conflicting demands.

The issue carries significant weight for both parties. U.S. President Donald Trump is keen on limiting Tehran’s ability to develop a nuclear weapon, a move that could potentially ignite a regional nuclear arms race.

On the other hand, the Islamic Republic is eager to lift the severe sanctions on its oil-dependent economy.

The fifth round of discussions will be held between Iranian Foreign Minister Abbas Araqchi and Trump’s Middle East envoy Steve Witkoff. These talks will be facilitated by Omani intermediaries.

Source: Investing

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Source: Bastille post