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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.

WTI crude oil prices remain subdued in the mid-$79.00 range with fresh recession concerns

Daniel Rogers

Jan 19, 2023 15:00

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WTI crude oil maintains losses near $79.50 on Thursday morning, following a steep decline from the 1.5-month high the previous day. In doing so, the black gold struggles to justify expectations of increased energy demand from China amidst fresh US economic downturn concerns. The stronger U.S. dollar and recent hawkish statements from Federal Reserve (Fed) officials could also be placing downward pressure on the energy benchmark.

 

The previous day, declining US data rekindled fears of an economic slowdown and weighed on Oil prices. In spite of this, US Retail Sales posted a 1.1% MoM decline in December, compared to a -0.8% market projection and a -1.0% prior reading (revised). On the same note, the Producer Price Index plummeted to its lowest level in six months with a -0.5% MoM figure, compared to a -0.1% MoM figure that was anticipated and a 0.2% MoM result from the previous month (revised).

 

In spite of this, Fed members remained hawkish as St. Louis Federal Reserve President James Bullard stated that US interest rates must rise higher in order to reduce inflationary pressures. On the same line, Loretta Mester, president of the Federal Reserve Bank of Cleveland, and Esther George, president of the Federal Reserve Bank of Kansas City, stated that the central bank must restore price stability, "which includes returning to 2% inflation." Recently, Lorie Logan, president of the Federal Reserve Bank of Dallas, advocated for a slower rate of rate hikes but also acknowledged the possibility of a higher rate ceiling.

 

Aside from China, experts at Goldman Sachs anticipated a stronger global economy and preferred more energy consumption from the dragon nation. In recent times, though, worries about the US-China friction have outweighed optimism. US Treasury Secretary Janet Yellen and Chinese Vice Premier Liu He met in Germany on Wednesday, which initially bolstered risk appetite with the BOJ's inactivity. However, the diplomats' mention of the disagreements sparked market fears of a new round of friction between the United States and China. Previously, the South China Morning Post (SCMP) stated that Beijing'should be cautious' as the United States and Taiwan pursue tighter economic ties.

 

The American Petroleum Institute's (API) Weekly Crude Oil Stock was 7.615 million compared 14.865 million the week prior.

 

As a result of these bets, Wall Street closed in the red, and yields also declined, but the US Dollar rebounded after falling to its lowest level since late May. However, the US Dollar Index (DXY) also rebounded from levels that were the lowest since May 31.

 

In the future, risk triggers will be more significant than the weekly oil inventory data from the US Energy Information Administration, which is predicted to be -1.75M compared to 18.962M previously.


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