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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.

We Are Raising Rates, Recession or Not, Gold Daily Analysis

Daniel Rogers

Jun 30, 2022 15:57

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Today, while speaking at the annual meeting of the European Central Bank in Sintra, Portugal, Chairman Powell made it clear that the Federal Reserve is dedicated to decreasing inflation, even if it necessitates hiking interest rates to levels that threaten economic development. His remarks reaffirmed that the Federal Reserve will "do whatever it takes" to return inflation to the 2 percent objective with sustained rate rises.

 

The chairman admitted that "there is a danger" that the Federal Reserve's new monetary policy may lead to an economic contraction and recession, but he stated, "I would not agree that this is the greater risk. The worse error would consist in failing to restore price stability."

 

You should only trade with capital that you can afford to lose while trading derivatives. The trading of derivatives may not be suitable for all investors; thus, you should ensure that you fully comprehend the risks involved and, if required, seek independent counsel. Before entering into a transaction with us, a Product Disclosure Statement (PDS) can be received through this website or upon request from our offices and should be reviewed. Raw Spread accounts provide spreads beginning at 0 pips and commissions of $3.50 every 100k transacted. Spreads on standard accounts begin at 1 pip with no additional commission fees. CFD index spreads begin at 0.4 points. This information is not intended for inhabitants of any nation or jurisdiction where distribution or use would violate local law or regulation.

 

Since current predictions indicate that tomorrow's Personal Consumption Expenditures price index (PCE) data will reflect that inflation continues to exceed the Fed's 2 percent inflation target for May by more than thrice. If these projections are accurate, the chance that the Federal Reserve will raise interest rates by 75 basis points at the July 26-27 FOMC meeting will grow. Recently, the Federal Reserve amended its "dot plot" to represent about twice the previous inflation target for the end of the year of 1 12 to 1 34 percent to a minimum of 3.4 percent.

 

Although the chairman downplayed worries of a recession by stating that the economy is in "very good form" and would be able to withstand tighter lending conditions while avoiding a recession or even a big rise in the unemployment rate, he added a crucial caveat. The longer high inflation persists, the route to a "soft landing" would become "considerably more difficult," according to him.

 

According to recent statistics, inflationary pressures will stay quite high. Additionally, the BEA announced today that "Real gross domestic product (GDP) declined by 1.6% annually in the first quarter of 2022, following a 6.9% gain in the fourth quarter of 2021. The drop was revised downward by 0.1 percentage point from the May "second estimate."

Why Is The Dollar Appreciating?

The combination of Chairman Powell's words and expectations implies that inflation, as measured by tomorrow's PCE price index data, has resulted in a very strong dollar in anticipation of rate hikes. The dollar's rise resulted from market players focusing on interest rate hikes rather than present inflationary pressures.


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