Trump Says He Has Vietnam Trade Deal With 20% Tariff On Imports

Economic

Summary:

President Donald Trump said he had reached a trade deal with Vietnam following weeks of intense diplomacy between the nations and ahead of a deadline next week that would have seen higher tariffs imposed on the country’s imports.

Under the agreement, Vietnam will pay a 20% tariff on exports to the US, with a 40% levy on any transshipments, Trump said in a social-media post on Wednesday. Trump said that Vietnam had agreed to drop all levies on US imports.

“In other words, they will “OPEN THEIR MARKET TO THE UNITED STATES,” meaning that, we will be able to sell our product into Vietnam at ZERO Tariff,” Trump wrote. The president said he he had secured the deal after discussions with Communist Party chief To Lam.

The deal with Vietnam would be just the third announced following agreements with the UK and China as trading partners race to cut agreements with the US ahead of a July 9 deadline.

Trump had imposed a 46% duty on Vietnam as part of his initial rollout of so-called reciprocal tariffs in early April that were levied on dozens of countries, but were then pared back to 10% to allow time for negotiations.

The Southeast Asian nation has seen its sales to US markets surge in recent years, partly because manufacturers shifted production there from China. It’s a major supplier of textiles and sportswear, hosting factories for companies such as Nike Inc., Gap Inc. and Lululemon Athletica Inc. Vietnam was the sixth-biggest supplier of US imports last year, sending goods worth almost $137 billion, according to Census Bureau data.

Shares in furniture stocks and apparel makers rose after Trump’s post, with ON Holding, Nike and Lululemon jumping to hit session highs, rising as much as 7.2%, 3.9% and 2.9%, respectively.

The deal with Vietnam was struck after weeks of discussions during which the US pressured the country to get tougher on trade fraud, ensure stricter enforcement against the transshipment of Chinese products, and also pushed for the removal of non-tariff barriers.

Vietnam offered to remove all tariffs and repeatedly promised to purchase more American goods. Senior Vietnamese officials flew to the US to rally support and sign deals, including for $3 billion of agricultural goods. The trade minister also wooed executives from Nike, Gap and others to encourage them to get behind negotiation efforts.

Brands raced to move manufacturing to Vietnam over the past decade as US-China tensions escalated. The industrial shift from China to Vietnam also helped build the kind of massive trade gap that made it a prime tariff target for Trump.

Last year, Vietnam’s trade surplus with the US was the third-largest globally on a country basis behind only China and Mexico. Shipments in May jumped 35% as firms sought to get goods onto vessels as quickly as possible ahead of the deadline.

Source: Bloomberg Europe

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Warren Takunda

Economic

Central Bank

The chair of the Federal Reserve, Jerome Powell, has blamed Donald Trump’s tariffs for preventing the immediate interest rate cuts the president has demanded.

Trump has repeatedly urged Powell to reduce borrowing costs in the US economy. On Tuesday, he said: “Anybody would be better than J Powell. He’s costing us a fortune because he keeps the rate way up.”

He spoke not long after Powell told a European Central Bank (ECB) event in Portugal that the Fed was waiting to assess the inflationary impact of the president’s trade policies.

Speaking on a panel of central bankers in Sintra, the Fed chair said: “In effect we went on hold when we saw the size of the tariffs. Essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs. We didn’t overreact, in fact we didn’t react at all. We’re simply taking some time.”

Asked if the Fed would have cut its key Fed funds rate further, from the current target range of 4.25-4.5%, if it wasn’t for tariffs, Powell said: “I think that’s right.”

Economists generally expect tariffs to be inflationary, as the costs of paying them tend to be passed on to consumers. The effects are highly uncertain, however, as some retailers may be able to absorb some or all of the costs, or switch to alternative suppliers.

Powell said: “We haven’t seen effects much from tariffs, and we didn’t expect to by now. We’ve always said the timing, amount and persistence of the inflation would be highly uncertain and it’s certainly proved that.”

He added: “We’re watching. We expect to see over the summer some higher readings, but we’re prepared to learn that it can be higher, or lower, or later or sooner than we’d expected.”

Trump has consistently sought to undermine Powell since returning to the White House, peppering him with insults such as, “major loser” and “very dumb”, and reportedly considering replacing him before his term finishes in May next year.

When these personal attacks were raised at the ECB event, the Fed governor received a round of supportive applause from the audience – and from his fellow central bankers on the panel.

The US treasury secretary, Scott Bessent, has suggested the Trump administration might take advantage of the opening of a vacant seat on the Fed’s board to appoint a potential successor.

“There’s a seat opening up … in January. So we’ve given thought to the idea that perhaps that person would go on to become the chair when Jay Powell leaves in May,” he told Bloomberg TV.

Speculation that Trump could replace Powell early has been one factor behind the depreciation of the dollar, which has suffered its weakest first-half in more than 50 years.

Speaking alongside Powell on Tuesday, the ECB president, Christine Lagarde, suggested it was too soon to declare “mission accomplished” on inflation in the eurozone; while the Bank of England governor, Andrew Bailey, said there were signs that the jobs market in the UK was slowing.

Source: Theguardian

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Adam

Bond

The 10-year U.S. Treasury yield rose on Wednesday as investors digested weak data for the jobs market and weighed the impact of President Donald Trump’s tax-and-spending package, which narrowly passed the Senate on Tuesday.

The 10-year yield rose about 2 basis points to 4.271%. The 30-year bond yield was up about 4 basis points at 4.818%. The 2-year note yield fell 2 basis points to 3.754%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

Yields were higher earlier in the session before the ADP private payrolls data showed a decline of 33,000 jobs in June. Economists were expecting a gain of 120,000 jobs, according to Dow Jones. A weakening jobs market could spur the Federal Reserve to cut interest rates, but traders tend to put less weight on the sometimes volatile ADP numbers than the official federal jobs data.

Trump’s megabill cleared the Senate on Tuesday with a final vote of 51-50. The legislation now has to go through the House, where there are still some holdouts from Republican lawmakers.

The bill is expected to add $3.3 trillion to the fiscal deficit over the next decade, and some Republican lawmakers continue to show resistance to the bill. Trump has insisted that he wants the bill on his desk by July 4.

“We expect to see more volatility in fixed income, even once they get the bill passed, whatever that looks like,” said Jose Rasco, CIO of HSBC Global Private Banking and Wealth Management Americas, on “Closing Bell: Overtime.”

“Once these things get resolved and once the [Federal Reserve] gets back in gear, there’s a lot of upside here,” Rasco said.

Investors are also waiting to see more negotiations on trade deals as Trump’s 90-day pause on some of the highest tariffs are due to expire next week.

On the economic data front, investors will await the nonfarm payrolls report for June on Thursday. The bond market will be closed on Friday for Independence Day.

source :cnbc

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Michelle

Economic

Forex

The European Central Bank has reached the end of its rate cycle - and has become ensnared in the very problems to which it has significantly contributed. In Sintra, this was all but hidden behind a facade of central banker utopia.

The annual Sintra conference, just west of Lisbon, serves the ECB much as Jackson Hole does for the Federal Reserve. It’s a moment to review, to look ahead, and to tie the past year’s monetary policy into a broader political narrative. For ECB President Christine Lagarde, that narrative is easily summed up: after eight cuts, rates now rest at two percent; inflation hovers around the two-percent target; employment across the eurozone remains stable; and a fresh debt crisis is nowhere in sight.

That is the essence of Lagarde’s Sintra address—designed to convey one message: everything is under control. Even uncertainties such as Trump-era trade volatility, geopolitical upheavals, or the collapse of German industry are said not to derail the ECB’s set course. Following the market flood during the lockdowns, things are now deemed normal—markets “swing” around their equilibrium. In central bank parlance: they’ve found the “neutral rate.”

The Chimera of the Neutral Rate

The “neutral rate” is the holy grail of central banking mystique. When policy makers feel secure, and media campaigns successfully mask the erosion of fiat currency, it becomes the mantra. In this worldview, the ECB’s policy rate and some theoretical, consolidated market rate align—not by chance, but by design. Even before Lagarde’s closing remarks, ECB Executive Board members Joachim Nagel and Philip Lane had laid the groundwork all through June, repeatedly sending the “neutral-rate” message.

That message? That they have balanced inflationary and deflationary forces and steered the eurozone back onto a growth trajectory. Let’s skip debates over manipulated inflation stats and dramatically understated unemployment figures. These neutral-rate narratives are nothing more than central-bank fairy tales from One Thousand and One Nights—prepackaged press releases meant to evoke sovereignty. Economic processes don’t reduce to such simplistic frameworks. But that’s precisely not the point: the neutral-rate story is a sedative—for governments and markets alike.

The Fiscal Original Sin

The tale of the ECB as guardian of monetary stability is a relic of Bundesbank days. That era is long gone. Central banks worldwide, dragged into political-fiscal entanglements during the last debt crisis 15 years ago, have since become dependent. During the lockdowns alone, the ECB’s PEPP absorbed €1.85 trillion of eurozone sovereign debt—and today still holds roughly a third of that mountain of obligations.

Today, the ECB’s sole goal is to keep those sovereign debt-stacks liquid—buying up bonds shunned by the market to maintain the illusion that public debt, generous welfare, and Keynesian interventionism are all sustainably reconcilable.

Eurozone governments have long relied on external liquidity. With public debt averaging 100 percent of GDP, many member states would be insolvent without the ECB’s backstop. That would have consequences—not just for markets, but for social cohesion, internal stability, and the self-image of an EU-Europe built on oversized welfare motors that offer citizens a false sense of security and dangerously misjudge public capacity.

A withdrawal of the ECB from this nexus of fiscal irresponsibility, monetary support, and political overreach is thus unthinkable. The central bank is no longer just a guardian of the currency—it is the stabilizer of an eroding social model. Through indirect means and backdoor channels, it is underwriting pensions, welfare budgets, bureaucratic cogs—and obscuring how fragile the whole edifice has become.

The ECB is the last mortar holding that crumbling structure together. Remove it, and the house of cards collapses instantly. Which is why Lagarde and cohort must preserve the illusion of a steerable eurozone.

The Facts Tell a Different Story

Beyond the gloss of Sintra—in the real world of data—the eurozone is in serious crisis. Industry continues to shrink, and construction is in a deep recession. Over 50 percent of firms cite insufficient orders. Since 2021, German industry alone has cut 217,000 jobs—and by year’s end will lose another 100,000. Deindustrialization is advancing. Production is being moved abroad. Capital is fleeing, and productivity has stalled for eight years running.

The result: countries’ tax bases are eroding. Revenues fall and welfare costs rise, pushing debt burdens higher. Without genuine reforms, the eurozone risks a debt crisis that will once again force the ECB to serve as lender of last resort.

Years of zero interest have immersed the eurozone in the sweet poison of cheap credit. Now, subvention-dependent firms are collapsing under real positive rates. That’s “zombie economy.” And the latest casualty of green industrial planning—Northvolt—is just the latest to close its doors, a consequence of centrally managed economic policy.

Fed Holds Tough

Making matters worse: across the Atlantic, the Federal Reserve stands firm on its consolidation path, keeping rates at 4.5 percent—well above other major central banks. The U.S. is clearly prepared to accept a positive market rate, giving its economy room to purge unproductive elements. This lets productive capital reposition and fuel a fresh investment cycle. With tax cuts, energy deregulation, and rolling back green agendas, the U.S. is becoming a capital magnet—one that European economies can only envy.

In Washington, the view is clear: a period of pain brings greater rewards. While the U.S. equips itself administratively, technically, and innovatively for the digital age, EU-Europe stages a competition in ever-expanding welfare plans—rent caps, social handouts, green subsidies: consumption decreed and regulated to substitute for the productive machinery of revenue generation.

Europe has become addicted to welfare-state subventionitis—sticking to a hyper-statist model to defer social and economic pain. And always in the wings: the ECB and its fatal money press. How long this can last, only time will tell. But market tensions are mounting. The day when those tensions trigger a seismic shift, shaking the tectonic plates of the economy into new alignment, looms ever closer.

Source: Zero Hedge

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Adam

Commodity

Natural Gas: Rising Inventories, Cooling Demand Signal Further Downside Risk

The truce in the Middle East is a welcome development for natural gas buyers. Around 20% of the world’s oil passes through the Strait of Hormuz, so the reduced risk of disruption there has eased market tensions and lowered price pressure.

On top of that, gas supplies in the US are higher than usual for this time of year, and warmer weather has kept demand low. Because of this, US natural gas prices have dropped below $4 per unit. Prices may fall further, and could even return to the lows seen in April.

Bearish Drivers Line Up for Henry Hub Contracts

The latest report from the Energy Information Administration (EIA) provides fresh data on the natural gas market. One key highlight is that gas inventories rose in the week ending June 20 and are now 7% above the five-year average. In addition, weather conditions are playing an important role—temperatures across most US states, except the central region, are running higher than usual. This mix of strong supply and warmer weather is shaping current market dynamics.

Warmer weather means people are using less natural gas, which lowers demand. When that is combined with stable or rising storage levels, there is little reason for prices to stay above $4 per MMBtu. Looking ahead, the market will likely focus on inventory levels, especially as companies begin stockpiling for the winter—particularly in northern regions where demand tends to rise.

Henry Hub Vulnerable With Little Support in Sight

Henry Hub natural gas prices have fallen below the $4 per MMBtu mark and continue to decline. The next level sellers are watching is around $3.15 per MMBtu, where the market may see at least a short-term bounce.

Natural Gas: Rising Inventories, Cooling Demand Signal Further Downside Risk_1

The key level to watch is still this year’s low near $2.90 per MMBtu, where a strong rebound earlier confirmed solid support. If prices break below that, it could open up attractive buying opportunities, especially since it would push prices well below this year’s average as estimated by the EIA.

Dutch TTF Downward Trend Continues

European Dutch TTF gas prices have also been falling. However, in this case, the recent drop is part of a longer supply-driven trend that started back in February.

Natural Gas: Rising Inventories, Cooling Demand Signal Further Downside Risk_2

The €31 level held firm in April, confirming it as a key support zone. This level is now acting as a crucial barrier against further price drops. If it breaks, prices could head toward the long-term low near €23. On the upside, the next resistance is in the €41–42 range.

Source: investing

Risk Warnings and Disclaimers

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Glendon

Economic

Forex

When will the letters with Trump's promised "take it or leave it" offer be sent out? Will tariff rates revert to the 11% to 50% range announced on 2 April, or will there be multiple extensions beyond the 9 July deadline in cases of "good faith" negotiations?

With exactly one week remaining until the 90-day tariff pause ends, here's a snapshot of the current situation. Bear in mind that a lot can change between now and then.

Where we currently stand

Here is a list of the currently effective tariff rates:

World:

IEEPA universal tariff (as of 5 April): 10%
Section 232 tariffs:
- Auto (as of 3 April) & auto parts (as of 3 May): 25%
  - UK: 10% tariff quota for 100,000 vehicles
- Steel & aluminium and certain derivative steel and aluminium articles (as of 4 June): 50% (non-metallic content is subject to reciprocal tariffs)
  - UK: 25% (until at least 9 July)

China: 

Base tariff: 30% (since 14 May)
Effective tariff rate: up to 55% (includes legacy Trump/Biden tariffs under Section 301); 55% tariff total struck under ‘framework deal’ still to be confirmed
Elimination of de minimis rule (goods under $800): 54% tariff or a fee of $100 per postal item (since 14 May)

Canada and Mexico:

25% for non-USMCA-compliant goods
10% for non-USMCA-compliant energy and potash

Tariff reduction deals and trade talks

In recent weeks, there has been sporadic news about finalised or almost finalised deals, as well as stalled trade negotiations. According to news reports, agreements with up to 10 major trading partners, following China and the UK, are imminent, as countries race to avoid the steep tariff hikes. But with time running out, tariff exemption extensions may still be needed after 9 July.

China: The US has already finalised a key deal with China, securing rare earth mineral exports in exchange for lifting certain countermeasures. Details or an official document have not been disclosed – likely due to the sensitivity of the agreement, which touches on strategic resources and ongoing geopolitical tensions.

While the US-China agreement marks a significant de-escalation with both nations previously imposing sweeping tariffs and non-tariff barriers, we should not forget that the effective tariff rate for goods entering the US from China still stands at 55%. Additionally, several anti-dumping countermeasures are in place. Tensions remain high as China voices strong discontent over other countries entering trade agreements with the US, which it considers to be undermining its interests.

EU: US President Trump has threatened to increase tariffs to 50% instead of 20% from 9 July, if the US and the EU are unable to strike a deal. EU retaliation, on the other hand, would kick in as of 14 July. A sticking point for the US remains non-tariff barriers, such as the EU’s Digital Markets Act (DMA) or its Carbon Border Adjustment Mechanism. Reports suggest, however, that the EU signalled readiness to grant American companies exceptions from the DMA, if it were to get sector-specific exemptions from US tariffs or quotas, especially in key sectors such as automobiles, steel, aluminium, pharmaceuticals, and semiconductors, while accepting a 10% universal tariff.

Canada: Trade talks between Canada and the US have resumed after a period of tension, primarily caused by Canada’s proposed Digital Services Tax (DST). Canada had planned to implement a 3% digital services tax on large tech companies operating in the country. This tax, retroactive to 2022, was seen by the US as a direct attack on American businesses, with Trump terminating all trade discussions with Canada. To de-escalate the situation and resume negotiations, Canadian Prime Minister Mark Carney announced the repeal of the DST just before it was set to be enforced. Both sides now aim to finalise a new trade deal by 21 July.

Our base case: We do not anticipate the current negotiations to be fully concluded by 9 July, so extensions for the ongoing talks are likely. Canada has already secured itself an extension until 21 July by agreeing to US demands to scrap the digital tax. For China, the official deadline remains 12 August, although it is unclear whether the recent framework trade agreement between the US and China has nullified this deadline. No formal announcement has been made yet.

Temporary tensions are possible, e.g. between the US and Japan, especially over car tariffs, or between the US and the EU, with symbolic retaliation in areas where there are not enough concessions from the US to trade partners (e.g. EU retaliation, but in non-sensitive areas).

US stance on tariffs unchanged: protectionism is still the name of the game

Despite trade talks, the US is not pursuing reciprocity – tariff revenue is a strategic goal to finance at least part of the Big Beautiful Bill Act. Commerce Secretary Howard Lutnick has made it clear: zero-for-zero deals are off the table.

A closer look at Project 2025 also suggests that mirroring foreign tariffs could reduce the trade deficit more than reciprocal reductions.

Our base case: The average current tariff rate of 13% is unlikely to change by year-end. Protectionism is still the name of the game for the US, although tariff rates will not increase back to reciprocal levels as of April. The 10% baseline tariff is here to stay. And we still expect sector-specific tariffs to rise in the third and fourth quarters as Section 232 and 301 investigations conclude, though these tariff rates will vary by trading partner, with either a reduced MFN rate or quotas in place.

Targeted sectors: copper, lumber, cranes, critical minerals, pharma, semiconductors, shipbuilding, trucks and aircraft, while tariffs on cars and car parts, aluminium and steel are already in place. That means that the average US tariff rate will remain around its current level, e.g. between 12-15%, with the EU still facing some 10-15% and China around 50% tariff rates.

Strategic trade shifts: allies caught between the US and China

Despite potential trade deal announcements, the trade war and the reshuffling of trade flows are far from over. With Canada introducing a new tariff quota (TRQ) on steel mill product imports from non-free trade agreement (FTA) partners as of 27 June, redirecting goods via third countries is becoming increasingly difficult. China has once again expressed strong discontent with other countries entering trade agreements with the US that it perceives as undermining its interests. The Chinese Ministry of Commerce warned that it would take “firm, resolute countermeasures” if such deals come at China’s expense, calling the US strategy of reciprocal tariffs “unilateral bullying” that disrupts the international trade order.

We have warned before that the US tariff strategy could prompt global concessions and isolate China, with countries targeted by potential US tariff action making significant concessions, ultimately improving trade relations between the US and the rest of the world, but at the expense of China.

As China is perceived as the largest geopolitical threat to the US administration, there is a huge possibility that American policies will focus more on indirect trade impediments, including investment, social media, and technology cooperation, pressuring companies to reduce their business with China if they wish to invest in the US. This places both Asian/Chinese trade partners and US allies in a difficult position.

While many trading partners have launched anti-dumping investigations into some of China’s trade practices, the Chinese market is even more important to ASEAN nations, African, Latin American countries and even Germany in terms of imports than the US market. Many countries rely on Chinese components and raw materials, and the flexing of China curbing rare earth exports shows that there is no easy way out when choosing between the US and China.

What else to watch: court rulings

31 July remains the key date to watch in the legal battle over the IEEPA tariffs. While the US Court of International Trade (CIT) ruled that Trump overstepped his authority under the IEEPA – impacting tariffs on China, Canada, Mexico, and others – the US Court of Appeals for the Federal Circuit (CAFC) issued a stay on the CITs ruling, meaning that the IEEPA tariffs remain in effect for now. A final decision is expected in August, though the exact timing depends on how quickly the court rules after the hearing.

If the CAFC upholds the CIT’s ruling, the case is likely to go to the US Supreme Court (the Supreme Court denied a request by two small businesses to expedite the case, meaning it will proceed through the normal appellate process). Additionally, the Supreme Court ruling from 27 June, which significantly restricts the use of nationwide (or universal) injunctions, could impact the IEEPA tariff litigation. This means that only the plaintiffs in that specific case may benefit, and those seeking broader relief may now need to pursue class certification.

Source: ING

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Adam

Economic

Stocks are drifting at the start of Q3 as we lead up to some key event risks. Although President Trump’s Budget bill passed the Senate, he is holding firm with his July 9th deadline to reinstate reciprocal tariffs on some nations including Japan. European stock indices are higher on Wednesday and US futures markets are also pointing to a higher open, the dollar is broadly higher.

UK Government U-turn on welfare has big fiscal consequences

The bond market is also in focus. Bond yields are rising across Europe and in the US this morning, partly reversing Tuesday’s decline in yields. The focus is on the UK bond market, after another government U-turn on welfare reform. The cost of recent government U-turns, including on winter fuel, is adding up to over £7bn, which will have to be found by either raising taxes, cutting spending or through higher borrowing.

These are not palatable options; however, the vigilantes are not attacking the UK’s bond market at this stage. They may wait to see what the Chancellor will do to enable her to stick to her fiscal rules in the Autumn Budget, after a government minister told the media today that the government will stick by its pledges not to increase tax on ‘working people’. Added to this, the prospect of rate cuts from the Bank of England next month focuses minds on a drop in interest payments for the national debt, which is one bit of good news for Kier Starmer’s beleaguered government.

Bond Vigilantes leave the UK alone for now

UK bond yields are moving in line with European and US yields on Wednesday, and although the pound is lower, this is more down to dollar strength, and all G10 currencies are weaker vs. the dollar today.

The bond and stock markets seem to be ambivalent to fiscal deficits and the risk of rising national debt right now, as the focus is on central bank action and US reciprocal tariffs. Added to this , the UK market does not seem to be pricing in the prospect of political change, after a humiliating week for the UK PM. Right now, a cabinet reshuffle is a near certainty, rather than a new PM.

New York, New York is calling for AstraZeneca CEO

UK shares are higher today, and AstraZeneca is in focus. A media report last night said that the CEO is looking to move the UK’s largest listed company to the US. This would be a massive blow to the UK’s stock market, which is already struggling with a dearth of listings and large companies chasing the allure of higher valuations and higher CEO pay in the US.

Can the government persuade AstraZeneca to stay in the UK?

Astra Zeneca is the latest to fall victim to the bright lights of the New York Stock Exchange. However, after its share price jumped late on Tuesday, it has since given back those gains on Wednesday and is slightly down on the day so far. There has been no official statement from the CEO or AstraZeneca, and the report is based on private conversations only. The threat to move the primary listing to the US could be an attempt to force the government and the NHS to rethink its refusal to offer AstraZeneca’s latest breast cancer drug Enhertu.

The loss of AstraZeneca to the US stock market would heap huge pressure on the UK government and undermine their pledge to boost growth and the UK’s cutting-edge life sciences sector. Thus, Pascal Soriot may have chosen a suitable time to look for a U-turn from the government on this, and it will be interesting to see if a deal is struck between the NHS and the company any time soon.

Although the government cannot block any move by AstraZeneca to move to the US, the board could stop a move. However, there is no denying that the US is an attractive place for pharma companies. It has the highest medicine spend per person in the world and by by far the highest levels of CEO compensation.

Japan shares are victims of US trade negotiations

Japanese shares were the standout underperformers during the Asian trading session for the second day, and in the last two sessions, shares are down nearly 2%. This suggests that tariff fears remain front and centre for traders. The contrast with European indices, which are only mildly lower, is worth noting. The market remains wary, but so far Donald Trump has not singled out the European Union for criticism, which is protecting European shares from a deeper sell off. Of course, if he does start lambasting the EU, then this could spook investors, especially as there is only 1 week to go before the deadline to make trade agreements or face reciprocal tariffs.

Powell biding his time on rate cuts, brushes off Trump pressure

The broad dollar strength on Wednesday is linked to comments from Fed chair Jay Powell, at the ECB’s global central bank conference in Sintra, Portugal. He reiterated the need for patience when it comes to monetary policy, and to wait for the expected increase in inflation to pass over the summer months. He would not commit to a July rate cut, which highlights his ability to withstand pressure from President Trump who is pushing for aggressive rate cuts.

The interest rate futures market has barely changed on the back of these comments. There is still only a 20% chance of rate cut from the Fed in July, with a 90% chance of a cut in September. Those expecting an early summer cut could be disappointed.

US jobs report in focus

Overall, the focus is on tariffs, and risk sentiment could be impacted by headlines on the progress of negotiations between the US and its trading partners. We are leading up to tomorrow’s US labour market report. ADP jobs data is released this afternoon and is expected to show an increase in private sector jobs last month. We will also be watching global bond yields to see if the UK Gilt market reacts to the potential for more borrowing in the UK economy.