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German Finance Minister: It would be naive to think that if we leave it alone, the situation will get better. The EU needs to respond strongly to US tariffs.UK Business Secretary: We will not rethink our fiscal rules because of US tariffs.German Finance Minister: Despite the US announcement of tariffs, negotiations are still ongoing and no one has closed the door to trade negotiations with the US.Switzerlands March CPI monthly rate will be released in ten minutes.Comprehensive tariffs and reciprocal tariffs 1. Mark Zandi, chief economist at Moodys: On a static basis, new tariff revenues account for nearly 2% of GDP (not considering the impact of tariffs on the economy and taxes), which makes this round of tax increases the largest since the tax increases used to finance the war during World War II. 2. JPMorgan Chase report: If these tariffs are fully implemented, the actual tariff rate in the United States may rise to 25%. This will affect about $3.3 trillion worth of imported goods. This years cumulative tariff increase should be regarded as a tax increase of about $660 billion, accounting for 2.2% of GDP, making it one of the largest tax increases in modern history. 3. Capital Economics: Trumps tariffs could generate up to $700 billion (or 2.3% of GDP) in revenue each year, the average import-weighted tariff rate will jump to 19.1%, and the effective tariff rate will rise from 2.3% to around 26%, reaching the highest level in 131 years. 4. CICC: If these tariffs are fully implemented, the effective tariff rate of the United States may rise sharply by 22.7 percentage points from 2.4% in 2024 to 25.1%, which will exceed the tariff level after the implementation of the Smoot-Hawley Tariff Act in 1930. Tariffs may push up US PCE inflation by 1.9 percentage points and reduce real GDP growth by 1.3 percentage points, although it may also bring in more than $700 billion in fiscal revenue. 5. White House assistant Peter Navarro: Trumps tariffs may increase fiscal revenue by three times the scale of the World War II tax increase in 1942, which may become the largest tax increase in US history. 6. Trump himself said that some of the tariffs imposed this week could help the government raise more than $1 trillion in funds over the next year or so, help reduce the national debt, and may even offset some income taxes. Auto tariffs 1. White House Secretary Will Schaaf estimated that Trumps 25% tariff on cars and auto parts imported into the United States could increase "about $100 billion in new revenue." 2. Trump himself said that in a relatively short period of time, that is, one year from now, between $600 billion and $1 trillion would be raised. 3. The Yale Budget Lab, a think tank, estimates that auto tariffs could raise revenues of about $600 billion to $650 billion over 10 years, rather than in one year as Trump said, averaging $60 billion to $65 billion on an annual basis.

Gold Price Prediction: The XAU/USD pair will go below $1700 after a positive NFP report, followed by the CPI

Daniel Rogers

Oct 10, 2022 11:23

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The gold price declined after the U.S. Labor Department released employment data that exceeded expectations, thereby validating the Fed's need for additional tightening and supporting the dollar. Consequently, XAU/USD is currently trading at approximately $1690, below its initial price.

 

Prior to the announcement of the US Nonfarm Payrolls report, the price of gold hovered around $1710. Gold's initial reaction to the headline, however, was a decline into the $1700 region, but this initial movement quickly vanished. In a volatile reaction, it extended its losses below $1700 at the time of typing.

 

US Bureau of Labor Statistics (BLS) data revealed that the US economy added 263K new jobs, above predictions of 250K, while the unemployment rate decreased to 3.5% from 3.7%. Even while the reading is lower than August's, it was above expectations, which would strengthen the case for a Federal Reserve rate hike.

 

In the meanwhile, money market futures have put in a 92% likelihood of a Fed rate hike of 75 basis points, up from 85.5% prior to the US Nonfarm Payrolls report.

 

US Treasury bond yields rose, with the 10-year US Treasury bond yield increasing three basis points to 3.865%, while the US Dollar Index, a measure of the dollar's value vs six other currencies, rose 0.28% to 112.565.

 

Now that the US Nonfarm Payrolls report is in the rearview mirror, the next significant events on the US calendar are the September CPI statistics and the University of Michigan Consumer Sentiment study, both of which will take place in the coming week.


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