Trump Says South Korea, Japan Will Pay Billions 'upfront' In Investment

Economic

Political

Summary:

U.S. President Donald Trump insisted South Korea will provide billions of dollars in investments "upfront", despite Seoul's assertion that it would suffer a financial crisis if it meets the U.S. demands without safeguards.

In July, South Korea pledged $350 billion toward U.S. projects, but has balked at U.S. demands for control over the funds and South Korean officials say talks to formalise their trade deal are at a deadlock.

Earlier this month, Trump formalised a trade deal with Japan, lowering tariffs on Japanese automobile imports and other products in return for $550 billion of Japanese investment in U.S. projects, and U.S. officials have pressed Seoul to follow suit.

"We have in Japan it's $550 billion, South Korea's $350 billion. That's upfront," Trump told reporters on Thursday in the Oval Office as he touted the amount of money he said his sweeping tariffs have brought in.

South Korea, however, says it cannot afford to structure its investments in the same way as Japan, and President Lee Jae Myung told Reuters last week that without safeguards such as a currency swap, South Korea's economy could be plunged into crisis.

One South Korean government official said they had no comment on Trump's remarks, but reiterated that its stance remained that it would negotiate with the U.S. under the principle that the deal should meet national interests and is commercially feasible.

A senior finance ministry official traveling with Lee in the United States declined to comment when asked about the "upfront" comment.

Trump's comments came as his trade talks with South Korea have become increasingly dogged by political doubts, spooking investors who now worry Seoul may end up with a raw deal or perhaps no deal at all.

Analysts say a currency swap is unlikely, and South Korean negotiators are pushing for most of the funds to be in the forms of loans, rather than direct investment. They are also pressing Washington for mechanisms to ensure that the projects are commercially viable.

Source: Reuters

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Gerik

Economic

Details of the Request

Indian officials have highlighted the need for an alternative source of crude oil to replace Russian imports, which have been affected by US sanctions. The Indian government, through a delegation visiting Washington, urged the US to allow purchases from Iran and Venezuela, two other major oil producers under sanctions. They argue that cutting off all three suppliers could increase global oil prices, especially as India is heavily dependent on imports to meet its oil demand.

The US Embassy in New Delhi declined to comment on the private diplomatic talks but reiterated that India’s trade with Russia undermines American efforts to counter Russia’s actions. India, however, maintains that the country’s energy security goals would greatly benefit from increased US oil and gas involvement, as stated by India’s Commerce Minister, Piyush Goyal, during his visit to New York.

Oil Trade with Russia, Iran, and Venezuela

India has continued to purchase discounted Russian crude despite US sanctions, with Indian refiners relying on these cheaper supplies to reduce the cost of imports. Russia’s discount on oil, caused by global isolation due to the Ukraine war, has allowed India to maintain its oil import needs more affordably. In July, Indian refiners paid an average of $68.90 per barrel for Russian crude, compared to higher prices for Saudi and US oil, which stood at $77.50 and $74.20 per barrel, respectively.

While India stopped importing Iranian oil in 2019 due to US sanctions, and its largest private refiner, Reliance Industries, halted Venezuelan crude purchases this year, Indian refiners are still seeking affordable alternatives to fill the gap in their supply chain. Shifting to Middle Eastern barrels would come at a higher cost, inflating the country's overall import bill.

Global Oil Market Outlook

The oil market is expected to face a surplus in the coming year, with increased output from OPEC+ and other producers, which could exert downward pressure on global crude prices. However, India’s move to secure cheaper oil from sanctioned countries highlights the challenge of balancing economic needs with the constraints of international sanctions.

India’s request to the US for the permission to buy oil from Iran and Venezuela underscores its ongoing challenge in managing energy security amid international sanctions. While the country continues to buy discounted Russian oil, it faces the complex task of securing affordable oil supplies without exacerbating geopolitical tensions, especially with the US.

Source: Reuters

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Pepperstone

Forex

Political

Economic

The Fed's plan, right now, is to ‘run it hot'; incoming US data, meanwhile, says that things are already pretty toasty.Yesterday brought a slew of upside surprises – a chunky upward revision to Q2 GDP, to +3.8% annl. QoQ; the lowest initial jobless claims print, at 218k, since July; and, a much better than expected August durable goods orders figure, +2.9% MoM. Once again, this data not only speaks to the continued resilience of the US economy, and robust nature of underlying growth, but also supports the idea that some of the labour market softness, in particular, is more reflective of an adjustment to changing trade policies, as opposed to a sign of deeper structural issues.

In reaction to all of that, participants unsurprisingly pared bets on Fed easing, with the OIS curve now discounting just 39bp of cuts by year-end, as opposed to the 45bp we had in the curve this time last week. The cross-asset fallout was also pretty much what you'd expect to see amid such a hawkish repricing, as the dollar continued to bound higher against major peers, Treasuries softened across a flatter curve, and stocks had a bit of a wobble on Wall St.

I'd argue, though, that the pricing out of Fed cuts because the economy is resilient enough not to need them is far from a bad thing, or a bearish narrative. Quite the opposite, in fact, as such a narrative reinforces two of the most important legs of my long-running equity bull case, namely that economic growth remains robust, and earnings growth remains resilient.As such, I continue to view any equity dips as buying opportunities, with the path of least resistance leading to the upside. Frankly, the environment is akin to a goldilocks one, where the economy is ticking along nicely, risks to the outlook tilt to the upside, and the policy backdrop is to become considerably looser.

I'm also sticking with my bullish USD view, as risks to the outlook tilt increasingly to the upside amid the solid underlying nature of the economy, and with the Fed leaning in hard to provide extra support. Add that to the rather shambolic nature of developments everywhere else in G10, and the buck becomes not only the ‘cleanest dirty shirt', but also leaves us potentially on the verge of a return to the ‘US exceptionalism' theme.

Moving on, I've had a few questions in recent days about the continued tear higher in precious metals in recent sessions. Although gold took a bit of a breather yesterday, silver traded to fresh highs at $45/oz, while platinum and palladium chalked up solid gains as well. There's a lot of chatter about whether this rally bodes poorly for sentiment at large, to which I'd remind folk that gold and the S&P have rallied in line with each other for the last three years, quite easily setting to rest the whole ‘PMs are rallying must be bearish risk' idea.

Finally, I'd be remiss not to mention Gilts – ‘here he goes again!', I hear you cry! No, don't worry, I won't go on a rant about the UK's ongoing fiscal shambles today, but it was nonetheless noteworthy that as Govvies sold off across DM yesterday, it was the long-end of the Gilt curve that severely underperformed, with 10- and 30-year yields climbing 9bp apiece, taking the former to its highest level in three weeks. I remain of the view that we see 5% on 10s, and 6% on 30s, here in Blighty, before too long, potentially even before the Budget, which is still two long months away.

LOOK AHEAD – A light docket ahead today, thankfully, with almost nothing noteworthy scheduled during the European session.

Stateside, though, there's a smattering of prints, with last month's PCE report due, as well as final consumer sentiment stats from the University of Michigan. That sentiment metric is set to remain unrevised at 55.4, while the PCE figures should point to a core PCE deflator at 2.9% YoY in August, unchanged from the pace seen in July.Elsewhere, Canada gives us the incredibly noisy, and rather futile, monthly GDP figures for July, while the Fed's Bowman and Barkin speak this afternoon.Finally, all that's left for me to do is provide the usual warning for potential gapping risk on any unexpected news over the weekend, then hunt down a spot from which to watch the Ryder Cup later on, while enjoying a cold beer or three to wrap up the week.

Source: Pepperstone

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Gerik

Economic

Details of the Proposal

The U.S. government is reportedly considering a rule that would require semiconductor manufacturers to balance their domestic production with imports. Under this proposed policy, companies would be required to produce as many semiconductors in the U.S. as they import from foreign producers. Failure to meet this 1:1 ratio would result in the imposition of tariffs.

The report did not specify the timeline for implementing this policy or the exact tariffs that would be applied to non-compliant companies. The policy is part of the Trump administration's broader effort to boost domestic manufacturing and reduce reliance on foreign chip suppliers, particularly amid concerns about national security and trade imbalances.

Implications for the Semiconductor Industry

This move would have significant implications for semiconductor companies operating in the U.S. While it could encourage more domestic production of chips, it also places pressure on companies to adjust their supply chains and manufacturing processes. Many semiconductor firms currently rely on imports, particularly from Asia, where production costs are lower.

The policy could prompt increased investment in U.S. manufacturing facilities and lead to job creation in the domestic chip-making sector. However, it may also result in higher costs for U.S. companies that need to meet the new manufacturing requirements. The potential tariffs could also increase the cost of imported chips for U.S. businesses that rely on foreign suppliers.

Potential Impact on the Global Semiconductor Market

If the policy is implemented, it could have a ripple effect across the global semiconductor market. Countries that export chips to the U.S., particularly those in Asia, may be impacted by the new tariffs, which could disrupt global supply chains. The policy could also lead to increased competition between U.S.-made chips and foreign chips, potentially shifting the dynamics of the global semiconductor trade.

The proposed 1:1 domestic-to-import semiconductor ratio is a bold move by the Trump administration to boost U.S. manufacturing and reduce reliance on foreign producers. While it may help strengthen domestic production capabilities, it could also lead to higher costs and disrupt established global supply chains. The semiconductor industry will need to navigate these changes carefully to avoid potential penalties and tariffs.

Source: Reuters

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James Whitman

Political

Russian President Vladimir Putin and Myanmar’s junta chief Min Aung Hlaing held talks in Moscow about deepening diplomatic, defense, energy and investment ties.

The two leaders spoke Thursday on the sidelines of the World Atomic Week 2025, according to government releases.

The general told Putin that Myanmar planned to open a consulate in Vladivostok in the near future, on top of its embassy in Moscow and consulates in St. Petersburg and Novosibirsk, according to a Kremlin release.

“Looking east and west, you have a very large territory, so we’re opening consulates general for Myanmar to facilitate further cooperation between our countries,” Min Aung Hlaing was quoted as saying in the statement.

Sanctioned by the US and other western nations, Myanmar’s military regime is deepening ties with longtime partners Russia and China as it seeks membership in the Shanghai Cooperation Organization. After attending a forum in Moscow, Min Aung Hlaing will next travel to Kazakhstan, a SCO member.

Thursday’s talks also covered defense and broader cooperation in areas such as nuclear energy, electricity, health and pharmaceutical production, agriculture and education, according to Myanmar’s National Defense and Security Council. Min Aung Hlaing also reiterated his plan to hold general elections in December and to invite international observers.

Source: Bloomberg

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Gerik

Economic

Details of the Data Breach

A cybersecurity firm, UpGuard, uncovered a massive data leak in August, exposing 273,000 PDF documents containing bank transfer information linked to Indian customers. These documents were part of transactions processed through the National Automated Clearing House (NACH), a centralized system for recurring payments such as salaries, loan repayments, and utility bills.

The exposed records included sensitive personal information, including account numbers, transaction values, and customer contact details. These files were linked to numerous financial institutions in India, including major banks like Aye Finance and the State Bank of India. According to the UpGuard researchers, over half of a sample of 55,000 documents mentioned Aye Finance, with the State Bank of India also featuring prominently.

Cause and Response

The cause of the breach remains unclear, though such incidents are often due to misconfigurations or human error. UpGuard's researchers initially notified Aye Finance, NPCI (National Payments Corporation of India), and other relevant parties in early September. While the exposed data was eventually secured, thousands of new files were reportedly added to the exposed server daily before the breach was resolved.

However, there has been confusion and a lack of accountability regarding the breach. The NPCI, which manages the NACH system, denied that the data came from its systems. Aye Finance and the State Bank of India have yet to comment on the situation. The lack of clarity regarding responsibility raises concerns about the security of sensitive financial data and the actions taken to prevent future incidents.

Implications for Data Security

This breach highlights the ongoing risks associated with data security and cloud infrastructure. Sensitive financial information, including data related to recurring payments, was left vulnerable to public access due to an unsecured cloud server. While the exposed data has now been secured, the incident serves as a stark reminder of the importance of robust security measures, particularly for financial institutions that handle large volumes of sensitive customer data.

The breach could have severe implications for both affected individuals and the institutions involved. Customers may face increased risks of identity theft and financial fraud, while banks and financial bodies may experience reputational damage and legal challenges as a result of this failure to secure sensitive data.

As the data breach has been resolved, the primary concern now is accountability. The parties responsible for the security lapse and those responsible for alerting the affected customers remain unclear. With the rise of digital banking and online financial services, incidents like these emphasize the need for stricter security measures, transparent response protocols, and clearer responsibility for safeguarding sensitive financial data.

Source: TechCrunch

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Gerik

Economic

Details of the Investment Package

Japan and the United States finalized a memorandum of understanding (MoU) this month outlining the $550 billion investment package, which is to be made by January 2029, coinciding with the end of President Donald Trump’s term. The deal is designed to enhance Japan's economic security through strategic investments in sectors critical to its economy.

The investment package includes equity, loans, and loan guarantees from both the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI). The new facility at JBIC will serve as the cornerstone for this effort, providing financial support to Japanese companies seeking to expand internationally, especially in sectors crucial to Japan’s economic infrastructure.

Strategic Sectors and Regulatory Changes

The focus of the $550 billion package includes high-tech industries such as semiconductor manufacturing, energy production, and pharmaceuticals, as well as traditional sectors like shipbuilding and metals. These sectors are considered vital to Japan's economic security, and the new facility will help Japanese companies scale their operations globally.

In a significant move, Japan's finance ministry has revised regulations surrounding JBIC to broaden its investment scope, allowing the bank to invest in developed countries like the United States and Europe. Previously, JBIC’s investment in developed markets was more limited compared to emerging economies. This regulatory change will now enable JBIC to support strategic investments in critical industries like automotive manufacturing and pharmaceuticals in developed nations.

Implications for Japan's Economy and Global Trade

The $550 billion investment initiative is part of Japan’s broader strategy to bolster its economic resilience and secure its position in global markets. By providing financial backing to strategic sectors, Japan aims to enhance its global competitiveness and ensure long-term economic stability. The new facility is expected to play a crucial role in helping Japanese companies overcome challenges in overseas markets, ultimately contributing to Japan’s economic growth and strengthening trade relations with key global partners.

This move also signifies Japan’s deepening commitment to its economic partnership with the United States and its willingness to align with global economic trends while safeguarding its national interests.