Ukraine's Allies, After Fears Of Sellout, Signal Hope For Trump-Putin Talks

Russia-Ukraine Conflict

Summary:

Ukraine and its European allies on Wednesday signalled hope that U.S. President Donald Trump would push for a ceasefire at talks with Russia's Vladimir Putin without selling out Ukraine's interests or proposing to carve up its territory.

European leaders and Ukrainian President Volodymyr Zelenskiy met Trump in a last-ditch videoconference to lay out red lines ahead of a meeting between Trump and the Russian president in Alaska late on Friday.

French President Emmanuel Macron said Trump agreed that Ukraine must be involved in any discussions about ceding land while Zelenskiy said Trump had supported the idea of security guarantees in a post-war settlement.

German Chancellor Friedrich Merz said Trump - and Europe - were willing to crank up the pressure on Russia if Friday's talks proved fruitless.

TRUMP GIVES UKRAINE MEETING 10 OUT OF 10

The U.S. president said he rated the meeting "a 10", and his apparent willingness to take his allies' concerns on board, if confirmed, could bring a measure of relief after fears that he and Putin could reach a deal over Europe's head at Ukraine's expense.

However, Russia is likely to resist Europe's demands strongly.

"President Trump was very clear that the United States wanted to achieve a ceasefire at this meeting in Alaska," Macron said.

"The second point on which things were very clear, as expressed by President Trump, is that territories belonging to Ukraine cannot be negotiated and will only be negotiated by the Ukrainian president."

Merz, who hosted the virtual meeting, said the principle that borders cannot be changed by force must continue to apply.

"If there is no movement on the Russian side in Alaska, then the United States and we Europeans should ... increase the pressure," he said.

"President Trump knows this position, he shares it very extensively and therefore I can say: We have had a really exceptionally constructive and good conversation with each other."

Trump and Putin are due to discuss how to end the three-and-a-half-year-old conflict, the biggest in Europe since World War Two. Trump has previously said both sides will have to swap land to end fighting that has cost tens of thousands of lives and displaced millions.

RUSSIA MAKES SHARP ADVANCE INTO UKRAINE

On a day of intense diplomacy, Zelenskiy flew into Berlin for German-hosted virtual meetings with European leaders and then with Trump.

He and the Europeans worry that a land swap could leave Russia with almost a fifth of Ukraine, rewarding it for almost 11 years of efforts to seize Ukrainian land, the last three in all-out war, and embolden Putin to expand further west in the future.

Russian forces have made a sharp thrust into eastern Ukraine in recent days in what may be an attempt to increase the pressure on Kyiv to give up land.

Zelenskiy said there should be a three-way meeting between himself, Putin and Trump.

"I told the U.S. president and all our European colleagues that Putin is bluffing (about his stated wish to end the war). He is trying to apply pressure before the meeting in Alaska along all parts of the Ukrainian front. Russia is trying to show that it can occupy all of Ukraine .."

A source familiar with the matter said the call with Trump discussed possible cities that could host a three-way meeting, depending on the outcome of the talks in Alaska.

Since announcing the Alaska summit, Trump has played down expectations, saying it would be a "feel-out" meeting.

EUROPE AND KYIV FEAR UNFAVOURABLE ALASKA DEAL

Wary of angering Trump, European leaders have repeatedly said they welcome his efforts while stressing that there should be no deal about Ukraine without Ukraine's participation.

Trump's agreement last week to the summit was an abrupt shift after weeks of voicing frustration with Putin for resisting the U.S. peace initiative. Trump said his envoy had made "great progress" at talks in Moscow.

A Gallup poll released last week found that 69% of Ukrainians favour a negotiated end to the war as soon as possible. But polls also indicate Ukrainians do not want peace at any cost if that means crushing concessions.

Russian Foreign Ministry spokesperson Alexei Fadeev earlier said Moscow's stance had not changed since it was set out by Putin in June 2024.

As preconditions for a ceasefire and the start of talks, the Kremlin leader had demanded that Ukraine withdraw its forces from four regions that Russia has claimed as its own but does not fully control, and formally renounce its plans to join NATO.

Kyiv swiftly rejected the conditions as tantamount to surrender.

Source: Reuters

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Adam

Commodity

Gold advanced as traders reinforced bets of interest-rate cuts by the Federal Reserve after Treasury Secretary Scott Bessent urged the central bank to lower borrowing costs.

Bessent made his most explicit call yet for the Fed to execute a cycle of interest-rate cuts, suggesting the central bank’s benchmark ought to be at least 1.5 percentage points lower than it is now.

His comments boosted speculation that Fed will reduce rates next month, with some wagers pointing to a jumbo-sized cut. Bullion typically benefits in a lower-rate environment as it pays no interest.

Meanwhile, the Trump administration is considering several private sector candidates for chair of the Fed when the role opens in May, including a strategist at Jefferies LLC and an executive at BlackRock Inc., according to an administration official.

“With stagflation risks and a rate cutting puppet hitting the Fed chair sooner or later, the trajectory is higher” for gold, said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

Traders are still on the lookout for clarification on whether gold bar imports would be subject to tariffs. The US Customs and Border Protection agency stunned the market last week by saying they would be subject to duties, which prompted a spike in the premium for gold futures in New York over the spot price in London. On Monday, President Donald Trump said there would not be a levy but didn’t elaborate.

Futures and spot prices continued to converge after Trump’s latest comments. The December contract on New York’s Comex held near $3,400 an ounce on Wednesday, while spot gold traded near $3,355 an ounce.

Gold has climbed about 28% this year, with the bulk of those gains in the first four months. It has been supported by heightened geopolitical and trade tensions that have spurred haven demand, along with strong central bank purchases.

Spot gold edged 0.3% higher to $3,358.02 an ounce at 12:06 p.m. in New York. The Bloomberg Dollar Spot Index was down 0.2%. Silver climbed as much as 1.9%, while platinum and palladium fell.

Source : Bloomberg

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Devin

Central Bank

President Donald Trump said he may name the next Federal Reserve chair “a little bit early” and added that he was down to three or four potential candidates as he looks for a successor to Jerome Powell.

“I’ll be naming a new chairman sometime within the next — I think I’ll name it a little bit early, the new chairman. I’m down to three or four names,” Trump said Wednesday during an event at the Kennedy Center in Washington, describing the contenders as “all good, all great.”

Trump has hammered Powell over the central bank’s decision to hold interest rates steady, repeatedly calling in the past for him to resign and publicly mulling whether he should fire the chair outright before saying he would wait for his term to end in May. Naming his successor while Powell is still finishing his term raises the prospect of a “shadow Fed” emerging and risks creating whiplash for investors tracking the positions of both the current and future chairs.

While Trump has maintained that his list for the position includes is relatively short, Treasury Secretary Scott Bessent on Wednesday told Bloomberg Television the administration plans to consider as many as 11 candidates.

The president has ramped up his pressure on Powell in recent weeks, including threatening a lawsuit on Tuesday over the chair’s handling of a renovation of the central bank’s headquarters that has drawn scrutiny for cost overruns.

Trump said Wednesday that he believed rates “should be three or four points lower.”

“That’s over a trillion dollars we pay every year in interest, and it’s really just a paper calculation,” he added.

Powell has defended the bank’s rate-setting policies, citing uncertainty over the impact the president’s sweeping tariff agenda will have on inflation, but Trump has said higher borrowing costs are hurting American businesses, consumers and homebuyers.

“People aren’t able to get mortgages. They’re paying too much because of Jerome ‘Too Late’ Powell,” he said. “He’s truly incompetent.”

Data released earlier Tuesday showed underlying inflation picked up in July, though prices of goods rose at a more muted pace, tempering concerns about tariff-driven price pressures and raising expectations for a Fed rate cut in September.

Source: Bloomberg Europe

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Adam

Economic

Central Bank

In MAGA world, Stephen Miran, the White House economist President Donald Trump nominated last week to the Federal Reserve’s top ranks, is a force to be reckoned with.

Miran has been a key voice in support of Trump’s sweeping economic agenda, with the president praising him as “distinguished” and “unmatched.”

But what it takes to get nominated to the Fed is different from what it takes to succeed at the central bank.

Miran was nominated in place of Adriana Kugler, who resigned from the Fed with six months left in her term. That means Miran would serve on the Fed’s Board of Governors only until January 31, should he be confirmed by the Senate. His unconventional views of the economy will be on full display during his confirmation hearing before the Senate Banking Committee — the same views that would put him out of step with the rest of the board.

Unlike most mainstream economists, including those at the Fed, Miran believes that Trump’s widespread tariffs on US trading partners won’t stoke inflation — a view that suggests the Fed should have already cut interest rates this year, as Trump has loudly demanded for months.

He’s doubled down on that position as recently as Tuesday.

“There’s just still continues to be no evidence whatsoever of any tariff-induced inflation,” Miran told CNBC. “I think lots of folks who are expecting that, who are predicting doom and gloom, it just hasn’t panned out, and it continues to not pan out for them.”

Miran also co-authored a paper last year that argued against the Fed’s independence, though he’s struck a different tone in recent comments. It’s unclear if he’ll be as unequivocal about honoring the Fed’s independence as Chair Jerome Powell and other Fed members typically are.

“The Fed is a consensus-driven body, so someone has to be persuasive in making sure everyone is on the same page,” said Ed Mills, Washington policy analyst at investment firm Raymond James. “But Miran is aligned with the president’s views, not Jerome Powell’s.”

In Trump’s image

Miran aligns closely with Trump’s unorthodox vision for the US economy, centered on an overhaul in trade policy. He’s one of its architects, after all.

In a November 2024 paper, Miran argued that a steep decline in the US dollar’s value and a tariff-centric approach could reshape the global economy in favor of the United States.

Since the beginning of the year, the Trump administration has haphazardly rewritten US trade policy, with sweeping levies as high as 50% that went into effect just last week. Fed officials have warned those import levies could push up inflation, but Miran continues to say the doubters are all wrong.

Consumer prices in July rose 2.7% from a year earlier, according to the latest Consumer Price Index data, released on Tuesday — a continuation of relatively tame inflation readings so far this year. Economists polled by data firm FactSet expected to see an annual gain of 2.8% in July.

With signs that the labor market is sputtering, the Fed could be on track to cut interest rates as soon as next month anyway. But if central bankers have to stop cutting because inflation rises, Miran’s long-held view that any impact of tariffs on inflation is fleeting would be out of line with the board again. And he could find himself getting the cold shoulder.

“The latest data have revealed some more weakness in the economy, but there are still quite a few Fed governors who are worried about inflation,” said Daniel Altman, an economist and writer of the High Yield Economics newsletter.

And in his Manhattan Institute paper last year, Miran called the Fed’s independence an outdated idea and argued Fed officials should be subject to at-will dismissal from the president — more in line with Trump’s views that presidents should get a say on interest rates than with Powell’s view of a politics-free Fed. But he softened that stance on Tuesday.

“I’ve always been clear that independence of the Fed is of paramount importance,” he said in his CNBC interview.

Miran won’t see eye-to-eye with Fed officials

They have all said Trump’s tariffs could push up inflation to some extent. Even the two Trump appointees who dissented with the Fed’s decision last month to hold rates steady — Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman — have argued that tariffs could have at least a limited effect on prices.

“Tariffs are one-off increases in the price level and do not cause inflation beyond a temporary increase,” Waller said in a statement explaining why he dissented at the July policy meeting.

Miran, however, goes much further.

In an interview with CNBC last month, Miran said it is “rare” for tariffs to boost inflation, comparing such instances to “pandemics or meteors or whatever.”

If Miran becomes a Fed governor, he’ll have the chance to lay out his economic views, including on tariffs, and recommend to his colleagues what the Fed should decide on interest rates.

The Fed’s rate-setting committee consists of 12 voting members, each of whom have only one vote. That means being able to build a consensus — usually the responsibility of the chair — is crucial if Miran wants to bend the Fed to Trump’s will.

Still, Miran in some ways remains a conventional Fed candidate.

“We don’t know exactly how Miran is going to vote, but he’s still a traditional nomination. He’s the head of the Council of Economic Advisers after all,” Mills said.

Source: cnn

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Daniel Carter

Central Bank

Economic

Traders in contracts tied to the benchmark federal funds rate on Wednesday put the odds of a quarter-percentage point cut at the Fed's September 16-17 meeting at 99.9%, according to estimates calculated by the CME Group's FedWatch tool that followed the release of July Consumer Price Index data on Tuesday and later comments by Bessent noting that the Fed had used fears of a weakening job market as justification for a larger cut last September.Trump has slammed last year's cut, the first of three that took place before and after his election, as politically motivated given the proximity to the November presidential vote.

Bessent rooted his argument in recent Bureau of Labor Statistics revisions showing job growth had slowed to a crawl in May, June and July, in contrast to initial BLS estimates for May and June indicating stronger employment growth. Fed officials relied on those stronger numbers to argue that the labor market remained in good shape and to hold rates steady at meetings in June and July.

"If we'd seen those numbers in May, in June, I suspect we could have had rate cuts in June and July. So that tells me that there's a very good chance of a 50 basis-point rate cut," in September, Bessent said in an interview on Bloomberg television."Rates are too constrictive...We should probably be 150 to 175 basis points lower," Bessent said, adding to the Trump administration's penchant for public criticism and detailed policy advice for the independent central bank.

Bessent urged the rate cuts as the administration moves forward with its searching for a replacement for Fed Chair Jerome Powell, with the list of potential candidates now grown to 11, far larger than the short list of three Trump said he was considering just a few days ago.

The expanded list, confirmed by a White House official, now includes both of the Fed's vice chairs, Philip Jefferson and Vice Chair for Supervision Michelle Bowman, current Governor Christopher Waller, Dallas Fed President Lorie Logan, and top Trump economic adviser Kevin Hassett, along with several private sector figures.

Absent was current Council of Economic Advisers chair Stephen Miran, nominated to fill an open Fed board seat with a term that ends in January. Bessent said in his comments to Bloomberg that even if confirmed by the Senate he did not expect Miran to stay at the Fed beyond that point.

The opening Miran is filling could be needed to make room for Trump's pick to replace Powell, whose term as chair ends in May.

The rate cuts Bessent suggested stop far short of Trump's call for the benchmark rate to be cut to 1%, but would drop it from the current 4.25% to 4.5% range to around 3% - roughly what Fed policymakers consider to be a "neutral" stance that is neither boosting nor holding back the economy.

It suggests both a comfort level with the expected path of inflation toward the Fed's 2% target and the ability of the economy to maintain roughly full employment.

Fed officials have been reluctant to declare their inflation battle won, with prices rising faster than their target and expected to gather pace at least temporarily in coming months due to the impact of Trump administration tariffs.

But arguments to look past any tariff-related bump in prices are gathering steam, with more Fed policymakers saying the jobs revisions had made them more attuned to the possibility of rising unemployment, and some rate cut advocates arguing that the central bank needed to get ahead of the curve.

"A proactive approach in moving policy closer to neutral, from its current moderately restrictive stance, would help avoid a further unnecessary erosion in labor market conditions and reduce the chance that the Committee will need to implement a larger policy correction should the labor market deteriorate further," Bowman said in remarks on Saturday.

Source: Kitco

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Adam

Economic

India and China are restoring economic links strained by a deadly 2020 border clash, the latest sign Prime Minister Narendra Modi is drawing closer to the BRICS countries after US President Donald Trump hit the South Asian nation with a 50% tariff.

Modi’s latest move is to resume direct flights with China as soon as next month, said people familiar with the negotiations who asked for anonymity to discuss private matters. The deal could be formally announced when Modi is expected to head to China for the first time in seven years and meet leader Xi Jinping at the Shanghai Cooperation Organisation held in Tianjin from Aug. 31, the people said.

Flights were suspended during the Covid-19 pandemic, which coincided with a sharp decline in relations between the nuclear-armed neighbors after border clashes in the Himalayas killed 20 Indian soldiers and an unknown number of Chinese troops.

Modi’s economic calculus was fundamentally altered this month when Trump doubled tariffs on Indian goods to 50% as a penalty for its purchases of Russian oil. The US president’s remarks that India’s economy was “dead” and its tariff barriers “obnoxious” further strained relations.

The blow from India’s largest trading partner hit hard, especially after Modi had lavished praise on Trump and was among the first foreign leaders to visit after his return to the White House.

Henry Wang, president of the Center for China and Globalization think tank in Beijing, said relations between India and China are in an “up cycle,” and as leaders of the Global South, “they have to really speak to each other.”

“Trump’s tariff war on India has made India realize that they have to maintain some kind of strategic autonomy and strategic independence,” he said.

China, also a prime target in Trump’s trade wars, has shown signs it’s ready for a thaw. This month, it eased curbs on urea shipments to India — the world’s largest importer of the fertilizer.

Although initial volumes are small, the trade could expand, easing global shortages and prices. China relaxed the ban in June but had maintained restrictions on India until now.

The Adani Group is exploring a tieup with Chinese EV giant BYD Co. that would allow billionaire Gautam Adani’s conglomerate to manufacture batteries in India and extend its push into clean energy, according to people familiar with the matter.

Modi’s government recently allowed tourist visas for Chinese nationals after years of curbs. China is India’s second-largest trade partner after the US, and India needs key inputs from China to develop its manufacturing base.

While there may be a thaw, the two Asian powers are not likely to restore full trust overnight. They have seen each other as rivals for years and friction increased a few months ago when China supplied weapons and intelligence to Pakistan in its recent military dispute with India.

Part of Trump’s recent anger toward New Delhi comes from India denying his claims that his mediation helped defuse tensions with Pakistan. Modi also challenged those assertions directly in a call with Trump in June. India saw a shift in tone from the White House after that, according to the officials in New Delhi.

Modi is also strengthening ties with Brazil and Russia, fellow BRICS founding members. In August, he invited President Vladimir Putin to visit India as relations with the US soured.

Trump is frustrated with India’s continued imports of discounted Russian oil, which help fund the Kremlin’s war in Ukraine. Modi has shown no signs of backing down, and his government signed agreements with Moscow this month to deepen economic cooperation.

China and India Rebuild Ties After Modi’s Rupture With Trump_1

India Is a Top Buyer of Russian Crude | The four-week moving average of crude shipments from all Russian ports shows a surge in Indian purchases after the invasion of Ukraine

Modi has also talked trade and the imposition of unilateral tariffs against their nations with Brazilian President Luiz Inacio Lula da Silva. Bolstering commercial ties between Brazil and India was a key topic of Modi’s visit to Brasilia in July. During the call in early August, Lula and Modi also agreed to expand India’s trade deal with Mercosur, the South American customs union that includes Brazil.

The US has long courted India as a counterbalance to China in geopolitics but with Trump’s trade wars, Beijing and New Delhi are finding common ground. Xu Feihong, China’s ambassador to India, has offered Modi moral support over the tariffs.

“Give the bully an inch, he will take a mile,” Xu last week wrote on X over a quote from Chinese Foreign Minister Wang Yi denouncing the use of tariffs “as a weapon to suppress other countries.”

Source: Bloomberg

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Thomas

Economic

In the face of blistering criticism from President Donald Trump, Goldman Sachs economist David Mericle on Wednesday stood by a controversial forecast that tariffs will begin to hit consumer wallets.

Trump lashed out at the bank in a Tuesday post on Truth Social, suggesting that CEO David Solomon "get a new Economist" or consider resigning.

Mericle, though, said in a CNBC interview that the firm is confident in its research, the president's objections notwithstanding.

"We stand by the results of this study," he said on "Squawk on the Street." "If the most recent tariffs, like the April tariff, follow the same pattern that we've seen with those earliest February tariffs, then eventually, by the fall, we estimate that consumers would bear about two thirds of the cost."

The source of the president's ire was a Goldman note over the weekend, authored by economist Elsie Peng, asserting that while exporters and businesses thus far have absorbed most of Trump's tariffs, that burden will switch in the months ahead to consumers.

In fact, Peng wrote that Goldman's models indicate consumers will take on about two-thirds of all the costs. If that's the case, it will push the personal consumption expenditures price index, the Federal Reserve's main inflation forecasting gauge, to 3.2% by the end of the year, excluding food and energy. Core PCE inflation for June was at 2.8%, while the Fed targets inflation at 2%.

"If you are a company producing in the U.S. who is now protected from foreign competition, you can raise your prices and benefit," Mericle said. "So those are our estimates, and I think actually, they're quite consistent with what many other economists have found."

Of note, Mericle said Trump likely still will get at least some of the interest rate cuts he's been demanding of the Fed.

"I do think most of the impact is still ahead of us. I'm not worried about it. I think, like the White House, like Fed officials, we would see this as a one-time price level effect," he said. "I don't think this will matter a whole lot to the Fed, because now they have a labor market to worry about, and I think that's going to be the dominant concern."

Following modest gains reported this week for the consumer price index, and a weak July nonfarm payrolls report that featured sharp downward revisions to the prior two months, markets are pricing in cuts from the Fed at each of its three remaining meetings this year.