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On April 26, according to the Wall Street Journal, in order to simplify the negotiations on reciprocal tariffs, US negotiating officials plan to use a new framework developed by the Office of the United States Trade Representative (USTR), which lists major categories of negotiations, such as tariffs and quotas, non-tariff trade barriers, digital trade, product origin principles, economic security and other commercial issues. In these categories, US officials will put forward specific requirements for individual countries, but people familiar with the matter emphasized that this document may also be adjusted at any time. People familiar with the matter said that the United States initial plan is to negotiate with 18 major trading partners in turn over the next two months. The initial plan is to alternately participate in the talks with six countries per week for three weeks (six countries in the first week, another six countries in the second week, and another six countries in the third week) until the deadline of July 8. If US President Trump does not extend the 90-day suspension period he set by then, those countries that cannot reach an agreement will begin to face reciprocal tariffs.On April 26, after the United States announced additional tariffs on goods from many countries, Peruvian business people expressed concerns that the US governments extreme measures would disrupt the global trade order and may even trigger a global economic recession. Alvaro Barrenechea Chavez, vice president of the Peruvian-Chinese Chamber of Commerce, said that the negative impact of the US tariff policy has begun to emerge and hoped that the US government would rethink. Recognizing the importance of countries working together to promote development, I think this is the best way to become a true "world citizen."Market news: Musks xAI company plans to raise about US$20 billion in a financing round.Conflict situation: 1. Ukrainian top commander: Russia tried to use air strikes as a cover to increase ground attacks, but was repelled by Ukraine. 2. Ukrainian Air Force: Russia launched more than 103 drones in the night attack on Ukraine. 3. Local officials said Ukraine launched an attack in the Belgorod region of Russia, killing two people. 4. The local governor said that Russia launched an attack on the Dnipropetrovsk region of Ukraine, killing one person and injuring eight people. Peace talks: 1. Trump: ① The situation between Russia and Ukraine is gradually becoming clear, and they are "very close" to reaching an agreement. ② Ukraine is unlikely to join NATO. ③ Ukraine has not yet signed the rare earth agreement and hopes that the agreement can be signed immediately. ④ It is foreseeable that the United States will conduct commercial cooperation with Ukraine and Russia after reaching an agreement. 2. Russian Foreign Minister: Russia is "ready to reach an agreement on Ukraine." 3. Russian Presidential Assistant Ushakov: Russia and the United States will continue to maintain active dialogue. 4. Russian Presidential Assistant: Putin discussed the possibility of resuming direct negotiations between Russia and Ukraine with the US envoy. 5. The differences between the United States, Europe and Ukraine are clear. The documents show that European countries and Ukraine have raised objections to some of the US proposals to end the Russia-Ukraine conflict. 6. Market news: As part of the peace agreement, the United States asked Russian President Putin to abandon the demilitarization requirement. Other situations: 1. President of Hungarys OTP Bank: We hope to return to all business areas in Russia after the (Russia-Ukraine) conflict ends. 2. Ukrainian President Zelensky: US ground forces are not necessary for Ukraine. 3. Trump said Crimea will remain in Russia, Zelensky: Never recognize it. Agreeing with Trumps view, Crimea cannot be recovered by force. 4. NATO Secretary-General Rutte met with Trump and senior US officials to discuss defense spending, NATO summit, and the Ukrainian conflict.Rising global trade risks, overall policy uncertainty and the sustainability of U.S. debt top the list of potential risks to the U.S. financial system, according to the Federal Reserves latest financial stability report released on Friday. This is the first time the Fed has conducted a semi-annual survey on financial risks since Trump returned to the White House. 73% of respondents said that global trade risks are their biggest concern, more than double the proportion reported in November. Half of the respondents believe that overall policy uncertainty is the most worrying issue, an increase from the same period last year. The survey also found that issues related to recent market turmoil have received more attention, with 27% of respondents worried about the functioning of the U.S. Treasury market, up from 17% last fall. Foreign withdrawals from U.S. assets and the value of the dollar have also risen on the list of concerns.

Minutes of the Federal Reserve Meeting: Committee members expect the code reduction will begin in mid-November or mid-December

LEO

Oct 26, 2021 11:03

The minutes of the Federal Open Market Committee (FOMC) meeting on September 21-22 announced by the Federal Reserve on October 13th, Eastern Time showed that participants generally agreed that if the economic recovery generally remains on track, gradually reduce debt purchases and collect them around the middle of next year. Officials may be appropriate. Participants pointed out that if the decision to initiate debt reduction is made at the next meeting, the reduction process may begin with a monthly purchase schedule that begins in mid-November or mid-December.

The minutes of the meeting show that Fed officials are struggling to deal with the uncertainty within their responsibilities. They discussed whether the labor supply will rise to 2019 levels, and continue to bet that as supply constraints in the commodity and labor markets ease, high inflation will also subside. The decision to reduce this year is also aimed at managing the risk of their wrong judgments on prices.

change


Michael Pond, director of global inflation market strategy at Barclays, said that some changes have taken place. There is a concern that temporary inflation may be turning into structural inflation. Even the doves of the committee want to ensure inflation expectations and financial conditions. Will not trigger an alarm.

Fed officials kept interest rates near zero last month, but at the same time hinted that they are about to start reducing their monthly asset purchases of $120 billion. Fed Chairman Powell told reporters at a press conference after the meeting that this process may begin as early as November and end around mid-2022.

Pantheon Macroeconomics chief economist Ian Shepherdson said that the minutes of the meeting clearly indicated that unless a catastrophic event occurs, the Fed will announce a reduction in the next FOMC meeting on November 2-3.

The minutes of the meeting show that Fed officials are facing a high degree of uncertainty in the two missions of achieving full employment and price stability.

path


Fed officials discussed an exemplary reduction path: This path includes reducing the rate of asset purchases every month, reducing U.S. Treasuries by $10 billion, and agency mortgage-backed securities by $5 billion.

According to the minutes of the meeting, Fed officials stated that this path provides a “direct and appropriate template” that they may follow.

U.S. inflation is rising at the fastest rate in years, well above the Federal Reserve’s 2% target. Some officials said that supply bottlenecks and production problems have caused inflationary pressures to last longer than expected. The US Department of Labor announced on Wednesday that the CPI in September increased by 5.4% year-on-year.

The minutes of the meeting stated: Most participants believe that inflation risks tend to be upward, and they worry that supply disruptions and labor shortages may last longer, and the impact on prices and wages may be greater or longer than current expectations.

Inflation


In addition, Fed staff stated that risks have worsened, including the possibility that “long-term inflation expectations will rise significantly and cause inflation to continue to be high”.

Fed officials predicted last month that inflation will fall to near the target level next year, but 9 out of 18 people expect the Fed to raise interest rates in 2022, which is higher than the 7 in June. The FOMC maintains interest rates close to zero and said that it will maintain interest rates until the labor market reaches maximum employment and the inflation rate is expected to exceed 2% for a period of time. Many participants emphasized that economic conditions may justify keeping interest rates at or near their lower limit in the next two years. In contrast, some participants raised the possibility of increasing the target range before the end of next year, because they believe that the threshold for raising interest rates may be reached by then.