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Japanese Minister of Economy, Trade and Industry Yoji Muto: We will strongly request the United States to exempt Japan from tariff measures and set up a special working group to provide information and grasp the impact.Japanese Minister of Economy, Trade and Industry Yoji Muto: The content of (US tariffs) needs to be analyzed and the impact on the Japanese economy examined.Japanese Economy, Trade and Industry Minister Yoji Muto: We have told the United States that the new tariff announcement is "extremely regrettable."On April 3, Kimberly Clausing, a former Biden administration official and nonresident senior fellow at the Peterson Institute for International Economics, called Trumps tariff announcement on Wednesday "very stubborn and much worse than I expected." "I expected things to be bad, but I didnt expect this level of self-harm. Its shocking that anyone thought this was a good idea. Id be shocked if we can get through this without a recession and Trump doesnt have to reverse his policies."On April 3, some economists worry that if Trump does not quickly cancel the latest round of tariffs, it may push the US economy into a recession. "If the US government implements these higher tariffs without major exemptions, it will be difficult for the economy to digest this. A recession seems more likely." said Mark Zandi, chief economist at Moodys Analytics. Zandi said, "In many ways, the tariffs announced by Trump are even worse than the worst case scenario he envisioned. If they stick to it, I will buckle up and prepare for the impact." Zandi added that on a static basis, tariffs account for nearly 2% of GDP (not considering the impact of tariffs on the economy and taxes), which makes this round of tariffs the largest tax increase since the tax increase used to finance the war during World War II.

Before US Retail Sales, the US Dollar Index declines from a multi-year high due to cautious optimism

Daniel Rogers

Jul 15, 2022 11:33

截屏2022-07-15 上午9.48.59.png 

 

Bulls of the US Dollar Index (DXY), which hit a 19-year high earlier in the day at 108.65, find it difficult to gain momentum during Friday's Asian session.

 

The dollar index increased to a multi-year high against the six major currencies in reaction to recession fears and worries about the Federal Reserve's rapid rate hikes. However, the price decrease from the previous day was brought on by recent inconsistencies in Fedspeak and US statistics.

 

Among the most notable Fed speakers who sought to downplay the probability of an increase in interest rates were Christopher Waller, governor of the Federal Reserve, and James Bullard, president of the Federal Reserve Bank of St. Louis. Bullard of the Fed, however, noted that "up to this point, we've framed this conversation exclusively in terms of 50 vs 75." Reuters quotes Fed's Waller as saying that markets may have anticipated a 100 basis point rate increase in July too soon. It should be noted that the Federal Reserve will observe a blackout period before the July 28 Federal Open Market Committee meeting starting this weekend (FOMC).

 

The Producer Price Index (PPI) for final demand in the US increased to 11.3 percent on an annual basis in June, up from 10.9 percent in May, according to the US Bureau of Labor Statistics. This outcome was higher than the 10.7% market expectation. In addition, compared to the previous week's total of 235,000 and the market's projection of 235,000, there were 244,000 first claims for unemployment benefits for the week ending July 9. The number of weekly claims for unemployment rose to its highest level in five months.

 

It should be recalled that the previous day, DXY bulls were under pressure due to the shrinking spread between the 2-year and 10-year US Treasury rates. While 2-year bond coupons decreased by 0.75 percent to 3.12 percent, 10-year US Treasury rates finished Thursday at 2.95 percent, up 0.95 percent from the previous day. As a result, the difference between the coupons of short-term and long-term bonds shrank from 23 basis points (bps) on Tuesday to 17 bps.

 

The Wall Street benchmark had a mixed performance as a result of these moves, and as of press time, S&P 500 Futures had also seen moderate increases.

 

It will be vital to follow US Retail Sales, which are predicted to grow 0.8 percent MoM in June from -0.3 percent in May, in addition to watching Fed speakers for new encouragement. The Michigan Consumer Sentiment Index (CSI) preliminary readings for July, which are forecast to be 49.9 vs. 50.0 before, should therefore be watched for certain signs of future changes.


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