Tariffs

The Daily Update - Turkey Still in the Oven as Lira Decline Abates

The Daily Update - Turkey Still in the Oven as Lira Decline Abates

Intervention reverses lira decline for now, but wider market contagion point to likely further deterioration.

In August alone the Turkish lira depreciated from 5 against the dollar to above 7 earlier this week (it’s always exciting when you can talk about European FX moves in integers) but has today retraced somewhat, dipping below 6 momentarily whilst remaining choppy.

The Daily Update - US Tariffs and their inconsistencies - China and Vietnam

The Daily Update - US Tariffs and their inconsistencies - China and Vietnam

As the US warns of further ratcheting of tariffs up to 25% (from the originally threatened 10%) on $200bn of Chinese imports (beyond the $34bn already imposed and a further $16bn that may come into effect later today) it’s worth reviewing the US policy on FX manipulation, consider its impact on the global economy, and - as many will be worse-off in this brinkmanship - identify any that stand to gain from these escalating tariff threats.

The Daily Update - "Tariffs Are The Greatest!"

The Daily Update - "Tariffs Are The Greatest!"

Last week the EU signed the world’s largest bilateral trade pact with Japan – reducing friction in the eastward flow of wine and cheese and the westward shipment of vehicles and parts – five years in the making. However, this week is another story and the EU faces the further undoing of such Trans-Atlantic trade relations as its diplomats stand-up or stand-down to Trump’s escalating trade demands. According to Donald Trump yesterday, “Tariffs are the greatest!” – unless of course they are levied against the US like the EU’s £3bn retaliatory tariffs on bourbon and bikes.

The Daily Update - Treasury Yields, The TINA Trade and Trump Tariffs

The Daily Update - Treasury Yields, The TINA Trade and Trump Tariffs

Stocks have continued their 2-3 week sell-off (since June 11th) with the S&P and Dow down more than -2% and -4% respectively, US Treasury 10-year yields have today fallen below 2.85% (from above 3% earlier in the month) as have 30-year yields from 3.15% to 3% – after a strong auction yesterday demonstrated support at these levels. Meanwhile, Bloomberg splattered their front page with “Hedge Fund Managers See Echo of Past Crashes in Markets” with the likes of Greg Coffey calling, “The ghosts of 2000 are upon us”.

The Daily Update - Trump's discontent with global trade deals and the potential of tariffs

In chess there is an opening pattern called the ‘Trompowsky Attack’, or more simply ‘Tromp’, in which both players end up making sacrifices very early on. Last weekend Magnus Carlson opened The World Championship in New York City with the ‘Tromp’ in homage to Trump who just days before and a few miles down the road celebrated becoming President-Elect. Befittingly this opening, as much as the president-elect, is unusual and offers no certain advantage to those that opted for it – indeed the game ended up as a draw. 

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