DB Investing

Category: Global Trade & Tariffs

  • US Trade Tensions, Market Reactions & Fed Outlook

    US Trade Tensions, Market Reactions & Fed Outlook

    Trump’s Trade Moves, Iran Risks & Inflation Signals

    Trade Policy & Tariffs 

    President Donald Trump told reporters on Wednesday evening that he would be sending letters to the United States’ key trade partners over the next two weeks outlining his tariff plans. This comes ahead of a July 9 deadline to finalize trade deals with his administration. 

    Trump stated that countries will be offered a trade deal they can “take or leave,” strongly suggesting that he intends to move forward with significant tariffs. In early April, Trump introduced the idea of “Liberation Day Tariffs” but extended the deadline by 90 days for further trade negotiations. 

    Despite previously delaying such deadlines, Trump insisted there would be no further extensions this time. 

    He also claimed that a trade deal with China was ready, awaiting only the approval of President Xi Jinping. However, US tariffs against China remain in effect. 

    Geopolitical Tensions & Market Reaction 

    Gold and oil prices rose sharply following escalating US-Iran tensions. This came after the US authorized the departure of dependents from Bahrain and Kuwait, signaling concerns of potential retaliation. 

    President Trump expressed decreased confidence in reaching a nuclear agreement with Iran, reducing diplomatic hopes. The White House warned of possible military action if negotiations fail, with a key response deadline set for Thursday. 

    In return, Iran’s defense minister threatened to target US bases in the region if attacked. These tensions have added a geopolitical risk premium to oil, as investors fear disruption to shipping routes or oil infrastructure in the Gulf—fueling the latest price spikes. 

    Inflation & Federal Reserve Expectations 

    The US Consumer Price Index (CPI) report showed a 2.4% year-over-year increase in May—slightly below the expected 2.5%. Monthly inflation slowed to 0.1%, also below expectations. 

    Core inflation matched April’s 2.8% annual rate but came in softer monthly (0.1% vs 0.2% expected). Declining gasoline prices offset higher housing costs. 

    Despite these figures, analysts believe the Fed still needs to see weaker labor market data before resuming rate cuts. The current outlook points to a 100 basis-point cut starting in September, though this could be delayed if wage growth remains strong and tariffs push inflation higher. 

    While the tariffs’ impact remains limited, it’s too early for the Fed to fully discount inflation risks. 

    Conclusion 

    With global markets on edge, Trump’s hardline trade stance, Middle East volatility, and shifting inflation data are setting the stage for a turbulent financial summer. Investors should brace for potential shifts in monetary policy and heightened geopolitical risks. 

  • Global Market Turmoil Amid Trade Developments, Geopolitical Tensions, and Crypto Surges 

    Global Market Turmoil Amid Trade Developments, Geopolitical Tensions, and Crypto Surges 

    Global Market Turmoil Amid Trade Developments, Geopolitical Tensions, and Crypto Surges 

    Trump Announces Trade Agreement Framework with the UK 
    President Trump announced on Thursday a preliminary agreement with the United Kingdom, noting that the full details will be negotiated in the coming weeks. According to the agreement, the UK will expedite the clearance of U.S. goods through customs and ease restrictions on agricultural, chemical, energy, and industrial exports. 

    This announcement marks Trump’s first trade agreement since imposing high tariffs on dozens of the United States’ trading partners. 

    Upcoming U.S.–China Trade Talks 
    Trump also mentioned expectations of substantial negotiations with China. Officials from both countries are scheduled to meet over the weekend for trade discussions. 

    U.S. Trade Strategy and Tariffs 
    Commerce Secretary Howard Lutnick stated in media interviews that the U.S. plans to conclude dozens of trade deals soon but is likely to maintain a general 10% tariff rate. 

    Gold and Oil Markets React to Trade Sentiment 
    Gold, which typically rises during times of uncertainty, declined earlier due to signs of easing trade tensions. However, it later found support from prevailing caution ahead of the U.S.–China talks. 

    Oil prices saw slight gains during Friday’s Asian trading session, mainly supported by optimism around the potential easing of President Trump’s tariff agenda. However, gains were limited by the strengthening U.S. dollar. 

    Geopolitical Tensions Escalate 
    Market sentiment was also affected by rising geopolitical tensions between India and Pakistan, who engaged in their worst fighting in decades. Elsewhere, Trump called for an immediate ceasefire between Russia and Ukraine amid limited progress in peace negotiations. Nevertheless, a Russia-led three-day ceasefire is scheduled to begin this week. 

    Focus on Future Trade Agreements with Oil Importers 
    Markets are closely watching for further U.S. trade deals, especially with major oil importers like China and India. Talks with India are ongoing, and U.S. officials are expected to meet with their Chinese counterparts this week for more negotiations. 

    Despite this week’s gains, oil prices remain near four-year lows due to lingering uncertainty. Additionally, recent production increases by OPEC+ have negatively impacted crude prices amid growing economic concerns and their effect on demand. 

    Wall Street Gains on U.S.–UK Trade Framework 
    Wall Street climbed following news of a trade agreement framework between the U.S. and the UK. Eyes now turn toward a potential deal with China. 

    Crypto Markets See Explosive Growth 
    Cryptocurrencies have experienced strong upward momentum in recent hours. Bitcoin surpassed the $100,000 mark for the first time since February, jumping 24% over the past 24 hours to trade at $102,929.22 — driven by expectations of easing global trade tensions. 

    However, Ethereum stole the spotlight with an even more dramatic performance, surging 20.25% in the same period to reach $2,203. 

    The total market capitalization of cryptocurrencies rose accordingly, reaching $3.22 trillion — a significant 3.66% increase over the last 24 hours. 

    Asian Currencies Weaken Against U.S. Dollar 
    Most Asian currencies fell on Friday, affected by a rebound in the U.S. dollar amid increasing bets on a softening of President Trump’s trade policies. 

    The yuan, along with most Asian currencies, is set to lose ground this week as the dollar continues its recovery from its recent three-year lows. 

    The Indian rupee was among the worst performers of the day, losing ground amid continued hostilities between New Delhi and Islamabad. Ongoing fears over deteriorating relations between the two nuclear-armed neighbors kept risk appetite muted. 

    Japanese Yen Slightly Lower 
    The Japanese yen slipped 0.1% against the U.S. dollar but remained near a one-month high following weaker-than-expected overall wage income data, which contradicted the Bank of Japan’s narrative of rising wages and sticky inflation.