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MNI: Fed's Barr To Testify Changes Coming To Basel Proposal

(MNI) WASHINGTON

U.S. banking groups have criticized regulators' previous proposed changes.

LATEST INSIGHT

MNI UK Labour Market Insight: May 2024 Release

The labour market data marginally increases the likelihood of a June cut. One more hurdle has been removed. But the key remains next week's services CPI data.

MNI: Fed's Powell Urges Patience, Says Inflation To Move Down

Confidence over inflation path has fallen after firm first quarter data, Federal Reserve chair says.

MNI BRIEF: BCB Dissenters Wanted To Follow Guidance-Minutes

Dissenting members of Brazil's Central Bank who voted for a 50 basis-points cut last week argued for following guidance.

Political Risk

Presidential Race Swings Towards Trump Amid Concerning Polling For Biden

The 2024 presidential election race has swung towards former President Donald Trump amid new polling from the New York Times/Siena College which gave Trump a sizable lead over Biden in 5/6 key battleground states.

  • In addition, President Biden’s approval rating has slumped again - reversing a moderate recovery after his well-received State of the Union Address in March, according to the 538 tracker. Biden’s approval rating of 38.1% is significantly lower that the 40% benchmark which is considered a useful gauge of an incumbent president’s successful re-election.
  • For context, the RealClearPolitics tracker, which notes Biden at a firmer 39.5%, highlights the approval rating of previous presidents at the same time in their respective presidencies: “Approval May 14th (4th Year): Biden 39.5 | Trump 45.6 | Obama 48.3 | Bush 45.6.”
  • Axios reports that, “President Biden doesn't believe his bad poll numbers — and neither do many of his closest advisers,” noting that Biden told donors last week: "While the press doesn't write about it, the momentum is clearly in our favor, with the polls moving towards us and away from Trump."
  • For the first time since late March betting markets now see Trump as the favourite to win after an extended period where Trump and Biden were running in a dead heat. According to Smarkets, Trump has an implied probability of 50% of winning - the highest implied probabilty Trump has recorded since entering the race.

Figure 1: President Biden Approval Rating

Source: 538

Figure 2: 2024 Presidential Election Winner

Source: Smarkets

USTR To Release More Details On China Tariffs Next Week

MNI London: USTR Katherine Tai, speaking at the White House on new tariffs on USD$18 billion of Chinese imports unveiled by President Biden today, says "it is clear that the previous administration's trade deal with [China] failed to increase American exports or boost manufacturing. In fact China's exports in some critical sectors like EVs and batteries actually increased."

  • Tai says she expects to release a public notice next week which conveys, "the specific tariff lines, tariff rates, and timing for the proposed increases, along with the details of the machinery exclusions process."
  • Tai adds: "We do not seek to constrain China's economic development but we will insist on fair competition and defend working from the PRC's unfair practices."
  • Tai echo comments made by Biden a short time ago staking out a clear distinction between the Biden administration's "strategic" policy on China with Trump's less targeted approach which would also hit non-critical sectors and partners.
  • When asked if tariffs could increase prices for US consumers, Tai says: "I think that link between tariffs and prices has been largely debunked. What I would say... [we are focusing] on making supply chains more resilient [so] we can insulate the America. economy from [price spikes like COVID-19 and Ukraine war]."
  • Biden said earlier today: "My predecessor promised to increase American exports. He failed. He signed a trade deal with Chinaand they were supposed to buy $200 billion more of American goods, instead China's imports from America barely budged."

Blinken Signals Intention To Seize Frozen Russia Sovereign Assets

US Secretary of State Antony Blinken, speaking at Kyiv Polytechnic Institute, says that allies of Ukraine should "make Russia pay for Ukraine's recovery and reconstruction," adding: "What Putin destroyed, Russia should and must pay to rebuild. It's what international law demands. It's what the Ukrainian people deserve."

  • Blinken: "Our Congress has given us the power to seize Russian assets in the United States. We intend to use it. We're working with our G7 partners to see that Russia's immobilised sovereign assets are used to remedy the damage that Putin continues to cause. The G7 can unlock billions of dollars and send a powerful message to Putin that time is not on his side."
  • NYT notes that, due to objections from France, Germany, Indonesia, Italy, Japan and Saudi Arabia, as well ECB president Christine Lagarde, the idea of confiscation of assets, "appears dead for now."
  • The Times notes the EU is expected to approve a plan next week on using the interest accrued on the roughly 190 billion euros of assets held by Euroclear in Belgium to arm Ukraine and fund reconstruction: "Last week, they agreed in principle that they would be willing to use 90 percent of the profits to buy arms for Ukraine through the European Peace Facility...."
  • Blinken's comments suggest that Washington will pursue a more hawkish plan to seize the estimated USD$5 billion in Russian assets frozen in the US.

President Biden To Deliver Remarks On New China Tariffs Shortly

MNI London: US President Joe Biden is shortly scheduled to deliver remarks from the White House Rose Garden on a new regime of tariffs to be imposed on USD$18 billion of Chinese imports. LIVESTREAM

  • A White House fact sheet outlining the measures can be found here.
  • Commerce Secretary Gina Raimondo said in a statement today: “President Biden is taking decisive action to ensure unfair trade practices do not threaten our competitiveness and economic security, while also strengthening American manufacturing. This is a strategic approach to trade policy that will help protect key U.S. industries, like the clean energy and semiconductor sectors.
  • Raimondo: "We know the PRC’s playbook – we’ve seen their non-market actions on solar and steel – and cannot allow China to undermine U.S. supply chains by flooding the market with artificially cheap products that hurt American businesses and workers.”
  • The New York Times notes: "Mr. Biden’s moves are the latest trade-war escalation from a president who initially pledged to repeal at least some of the Trump tariffs but now refuses to cede any ground to his rival in a tough-on-China appeal to swing voters in the industrial Midwest and beyond."
  • Please see today's edition of the MNI US Daily Brieffor a full roundup of the tariffs and comments from Biden administration officials.

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