“President Donald Trump on Friday more than doubled the tariff rate on roughly $200 billion worth of Chinese imports, a move that sets the stage for retaliation from Beijing and that significantly raises the stakes in a yearlong trade war between the world’s largest economies.
“After accusing China of reneging on past trade commitments, the Trump administration has sought to increase pressure on Chinese officials in negotiations taking place this week. About $250 billion worth of Chinese products will now face a 25% duty when shipped to the US. Previously, a majority of those had been subject to a 10% import tax…
“Officials at the Chinese Commerce Ministry — who have denied that they made reversals on major aspects of a draft trade agreement — vowed on Wednesday to take countermeasures against increased tariff rates.
“Those could include tariffs on American products or other trade barriers. China has already placed retaliatory duties on $110 billion worth of imports from the US, which had caused significant trouble for the US agricultural sector.
“The escalation comes just as officials were thought to be nearing a deal.”
“Chinese state-backed funds were active in buying domestic equities on Friday after they had slumped in the wake of the Trump administration imposing the biggest hit yet to China’s exports to the U.S.
“State funds jumped in after the lunch break, when the Shanghai Composite Index dropped 0.4% after being up as much as 2.6% in the morning session, according to two people familiar with the matter. That helps explain the sharp V in intraday trading, one of them said, asking not to be named discussing private information.”
“A historical signal of a recession occurred Thursday, with the 3-month Treasury yield rising above the 10-year yield. This market phenomenon is known as an inversion of the yield curve, and may have spooked markets which had already been under pressure following a breakdown in trade negotiations with China…
“The 3-month and 10-year curve last inverted in March, sparking fears of a recession and a sell-off in the stock market. Before that, the last time such an event happened was in 2007, just months ahead of the Great Recession.”
“The British pound dropped to its weakest this month on Thursday amid doubts that Brexit negotiations between the ruling Conservative and opposition Labour parties would get anywhere…
“British media reported on Wednesday the Brexit talks were close to collapse, causing sterling to fall. Mounting pressure on Prime Minister Theresa May to name a departure date is also weighing on the pound.”
“A sharp economic slowdown in Germany has sparked a loud debate in the government about economic and policy priorities, putting fresh strain on the fractious left-right coalition.
“The finance ministry downgraded its tax revenue forecasts on Thursday, citing slower growth. Members of the coalition sparred over whether Berlin could afford a planned increase in welfare spending, if it should raise taxes to finance it or if it should cut them to support flagging growth.”
“Gaza is on the verge of a “humanitarian catastrophe” and 1 million Palestinians could soon go hungry, the United Nations has warned. The budget of the UN’s Palestinian refugee agency (UNRWA) is expected to dry up “in a month” and is in desperate need of additional funds, UN officials told The Independent.
“Nearly 2,000 Gazans shot by the Israeli army may also lose their limbs due to the funding crisis.”
“Days before the anniversary of the United States’s exit from a 2015 deal that curbed Iran’s nuclear programme, John Bolton, the US national security adviser, issued a stark warning. Citing a number of “troubling and escalatory” indications, Bolton said the US was deploying warships to the Middle East to “send a clear and unmistakable message” that it would meet any Iranian attacks on US interests “with unrelenting force”.
“For some, the comments also echoed the war rhetoric in the US before its invasion of Iraq in 2003.”
“The Philippines central bank cut its benchmark interest rate amid a sharp slowdown in inflation and economic growth, joining Malaysia and New Zealand in easing monetary policy this week as global risks mount…
“Central bank Governor Benjamin Diokno, who took office in March, is reversing tack after 175 basis points of rate hikes last year.”
“Australia’s central bank sharply downgraded forecasts for growth and inflation on Friday and signalled it will consider lowering interest rates if unemployment does not fall further, a major step towards the first policy easing since 2016…
“The shift in its stance is largely led by a sharp downturn in the country’s once-booming property market, which is hurting household consumption and income.”
“Brazilian retail sales in March posted their biggest annual decline in over two years, government statistics agency IBGE said on Thursday, adding to concerns the economy struggled badly, and possibly contracted, in the first quarter.
“Coming a day after the central bank kept its benchmark Selic rate on hold at 6.50 percent, the figures give further weight to the view that the economy will stagnate this year and add to calls for a cut sooner rather than later, economists say.”
“President Vladimir Putin watched intercontinental nuclear missile launchers roll across Red Square on Thursday as Russia put on its annual show of military might to mark the Soviet Union’s World War Two victory over the Nazis…
“Battling a ratings slump as Russia grinds through a sixth consecutive year of falling real incomes, Putin looked on as thousands of troops marched past and columns of tanks rumbled across the famous square in a display reminiscent of the Cold War era.”
“There is a perverse and hidden danger from climate change that few people, even those who unquestionably accept the science, know how to deal with. Someday, likely sooner than we think, the destruction that warmer global temperatures are inflicting — through record floods, wildfires, droughts and hurricanes — could physically overwhelm our ability to maintain many communities in their existing form.
“But by talking openly about this, and taking the necessary steps to address it, communities open the door to another danger. If markets suddenly value the risk of climate change properly, it could lead to a mass withdrawal of investment that kills real estate values, dries up tax revenue and leads to a wider financial crisis.”
“The Fed has a big new worry that is not presently on the market’s radar.
“With all the worries about headline economic data and the trade war, very little attention has been paid to the potential shock equities and bonds may feel from climate change.
“The Fed, however, is very focused on the risk. The Fed says that climate change can have a jarring effect on the economy that may “affect national economic output and employment.””