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Economists are skeptical that Donald Trump's proposed tariffs would generate enough revenue to fund his tax and spending promises. The Peterson Institute for International Economics estimates that a 10% tariff on all imports, plus a 60% tariff on China, could raise $225 billion annually. Bloomberg Economics suggests that a 20% across-the-board tariff could generate between $300 and $400 billion per year. However, these figures fall far short of the $5.2 trillion to $6.9 trillion that Trump's proposals would add to federal deficits. Additionally, tariffs designed to reduce trade flows would result in fewer imports to tax and less revenue. Trump's adviser, Scott Bessent, believes that a 10% across-the-board tariff and doubling duties on Chinese imports could raise $2.5 trillion to $3 trillion over 10 years. Bessent acknowledges that tariff collection would likely decline over time as the goal is to bring production back to the US. Trump has also proposed using tariff revenue to fund a sovereign wealth fund. Critics argue that the fiscal benefits of tariffs would be limited, as seen with the China tariffs imposed during Trump's first term. The higher the tariffs, the more businesses shift their supply lines and consumers seek lower-taxed alternatives. Trading partners may also retaliate with tariffs on American goods, which would harm US exporters and slow economic growth. The potential negative impact on the economy would offset any fiscal gains from tariffs. Despite bipartisan approval for Trump's China tariffs, Vice [Extracted from the article]

Republican nominee Donald Trump and running mate JD Vance have proposed a series of tax cuts that could cost up to $10.5 trillion over a decade, surpassing the budgets of all domestic federal agencies combined. The Trump campaign has not released detailed policy plans for these tax cuts, but they claim that wasteful spending will be cut and energy production will be increased to offset the cost. In comparison, Democrat Kamala Harris has proposed smaller tax cuts that would be offset by tax increases on corporations and wealthy individuals. The magnitude of Trump's tax promises makes it unlikely that they would all pass, even with a Congress controlled by Trump allies. The impact of Trump's proposals on economic growth is uncertain, as they primarily focus on individual tax cuts rather than business tax cuts. If Congress were to pass the tax cuts without increasing spending, major federal agencies would need to be eliminated. Harris and President Joe Biden have released a budget proposal to cut federal deficits by $3 trillion over a decade through tax increases on corporations and wealthy individuals, but these plans have faced opposition from business lobbies. The outcome of the tax agenda will depend on the balance of power in Congress, and taxes will be a top priority regardless of the election outcome. Trump aims to extend his signature tax law, which would cost $4.6 trillion over ten years, and has suggested additional tax ideas such as excluding Social Security payments from taxes, exempting taxes on tipped wages, and increasing the child tax credit. Trump has offered few options to raise [Extracted from the article]

The article discusses the ongoing debate among American companies about the effectiveness and impact of tariffs imposed on imports from China. While some businesses argue that tariffs protect them from cheaper Chinese competitors, others claim that they drive up costs and harm their operations. The Biden administration is currently reviewing proposed modifications to these tariffs, including 100% levies on electric vehicles. The article highlights the diverse perspectives and trade-offs involved in the use of tariffs, emphasizing the need for a balanced approach to trade with China. [Extracted from the article]

Central banks around the world, including the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan, are engaging in joint quantitative tightening (QT) for the first time. QT involves reducing the liquidity in the economy by shrinking central banks' bond portfolios. While each central bank's QT program is different, there are concerns about potential disruptions and market volatility. The Federal Reserve's QT program is expected to end soon, while other central banks are at varying stages of QT. The Bank of England has taken the most aggressive approach, actively selling off bonds, while the Bank of Japan is a newcomer to QT. There are also concerns about the impact of QT on government bond markets and the ability of central banks to continue with their plans amidst large debt issuances. Overall, the implementation of QT by central banks is expected to have implications for financial stability and market volatility. [Extracted from the article]

The July US consumer price index (CPI) report reveals that the core CPI, which excludes food and energy costs, increased by 3.2% compared to the previous year, the slowest pace since early 2021. Headline inflation rose by 0.2% from the previous month and 2.9% from a year ago, with nearly 90% of the monthly increase attributed to rising shelter costs. The data did not significantly impact expectations of rate cuts by the Federal Reserve, with futures trading indicating a full percentage point of cuts by year-end. Housing costs, particularly shelter, were the main driver of the increase, while sectors such as energy, new vehicles, apparel, and airfares saw declines. The market response to the data was relatively calm, with stock futures and Treasury yields experiencing slight increases. [Extracted from the article]

Central banks are facing pressure to ease their stance on interest rates due to volatile financial markets. Despite a recent mass selloff in equities, central banks in Australia, the United States, and Japan have indicated that they are not planning immediate rate cuts. However, some investors warn that the market turmoil may continue, potentially impacting economic growth. While there are concerns about a potential economic downturn, broader data suggests that there is currently little worry about a credit crunch. Traders are now expecting rate cuts from central banks around the world, including the Federal Reserve, the Bank of England, and the European Central Bank. [Extracted from the article]

The sudden replacement of the Democratic presidential candidate has introduced uncertainty about the economic policy outlook for 2025 and beyond. Market participants had assumed that former President Donald Trump was the favorite for victory, but the enthusiasm over Vice President Kamala Harris has forced prognosticators to reassess the odds. While Harris is expected to broadly adhere to the Biden administration's current policy mix, there are areas where she may signal her own policies, including individual income tax rates, climate, and consumer protection. The differences between Harris and Trump's policy proposals are stark, and the increased competitiveness of the election has led to a rise in uncertainty about the outcome, which will have implications for the global economy. [Extracted from the article]

The sudden replacement of the Democratic presidential candidate has introduced uncertainty about the future economic policy in the US. Market participants are now recalculating the odds of victory for former President Donald Trump and Vice President Kamala Harris. While Harris is expected to broadly adhere to the Biden administration's current policy mix, there are areas where she may signal her own policies, such as individual income tax rates, climate, and consumer protection. Harris has been endorsed by unions and has proposed a $10 trillion package to reduce greenhouse gas emissions. The differences between Harris and Trump's policy proposals are stark, and the increased competitiveness of the election has led to a rise in uncertainty in the market. [Extracted from the article]

The US economy is experiencing a slowdown, with companies hiring fewer workers, consumers spending less, and the housing market struggling due to high interest rates. However, this slowdown is considered a "textbook soft landing," as it is not causing a recession. Inflation has cooled without a significant increase in unemployment, and the economy continues to grow. Economists see a 30% chance of a downturn in the next 12 months, compared to 60% a year ago. The question now is how much the economy will decelerate and for how long. [Extracted from the article]

The article discusses the potential risks posed by increasing government debt loads and unpredictable election-year politics on bond markets. Despite the global economy expanding, deficits have grown due to heavy spending in response to the pandemic, leading to a projected increase in government debt by $2 trillion this year. The International Monetary Fund warns that newly elected governments may increase spending, exacerbating the trend. There are concerns about the ability of markets to absorb this growing debt without driving up interest rates. The article highlights recent political events in France, the US, and Mexico that have affected bond markets and emphasizes the importance of adhering to fiscal rules. While some believe that borrowing can continue without a crisis, cautionary examples like the UK demonstrate how quickly markets can turn on spendthrift governments. [Extracted from the article]

The article discusses the potential risks facing bond markets due to increasing government debt loads and unpredictable election-year politics. Despite a solid global economy, deficits have grown due to heavy spending in response to the pandemic, leading to a projected increase in government debt by $2 trillion this year. The International Monetary Fund warns that newly elected governments may increase spending, exacerbating the trend. Concerns about fiscal strains and uncertainty surrounding elections have raised anxiety about the fiscal path, with rating companies expressing concern and the Bank for International Settlements highlighting governments' vulnerability to a loss of investor confidence. The article also mentions specific examples, such as the selloff in Mexican markets after President-elect Claudia Sheinbaum's victory and the potential impact of the US election on bond markets. While borrowing can continue without an immediate crisis, the cautionary tale of the UK's bond market reaction to unfunded tax cuts is highlighted. The article concludes by emphasizing that investors dislike political uncertainty, instability, fiscal risks, and policy credibility shocks. [Extracted from the article]

The article discusses the potential risks facing bond markets due to increasing government debt loads and unpredictable election-year politics. Despite the global economy expanding, deficits have grown due to heavy spending in response to the pandemic, leading to a projected increase in government debt by $2 trillion this year. The International Monetary Fund warns that newly elected governments may increase spending, exacerbating the debt situation. Concerns about fiscal strains and uncertainty surrounding elections have raised anxiety about the fiscal path, with rating agencies expressing concern and the Bank for International Settlements highlighting governments' vulnerability to a loss of investor confidence. The article also mentions specific examples, such as the selloff in Mexican markets after President-elect Claudia Sheinbaum's victory and the potential impact of the US election on the deficit. While borrowing can continue without an immediate crisis, the cautionary tale of the UK's bond market reaction to unfunded tax cuts is highlighted. The article concludes by emphasizing that investors dislike political uncertainty, instability, fiscal risks, and policy credibility shocks. [Extracted from the article]

The global shipping industry is facing strains that are causing concerns about a potential comeback of inflation. The disruption of global goods trade during the pandemic left economic scars, but also led to companies becoming more flexible and reliant on technology and data tools. While merchandise trade has not yet seen a noticeable increase in consumer prices, there is a risk of rising shipping prices leading to inflation. Central banks may face challenges if consumer-price inflation resurges. The fragility of global trade has been highlighted by attacks on vessels in the Red Sea, and importers warn that costs may eventually need to be passed on to consumers. Some companies are considering re-shoring production to mitigate the impact of shipping disruptions. The exposure to shipping market cycles is particularly acute for US companies. The CEO of a baby-products company noted that rising container prices could drive inflation on goods. European companies, especially those closer to the Red Sea, are also feeling the effects of shipping disruptions. However, there are signs that the shipping crunch may be close to peaking, with port congestion in Singapore easing and spot container rates plateauing. While higher shipping costs are unlikely to be completely passed on to consumers, unexpected shocks could change this. In the short term, freight rates are expected to stabilize and possibly come down in September and October, but if the situation continues for another six to 12 months, companies may need to consider raising prices. [Extracted from the article]

The global shipping market is experiencing strain, leading to fears of a potential inflation comeback. The disruption caused by the pandemic has left economic scars, but it has also prompted companies to become more flexible and reliant on technology and data tools. While merchandise trade has not yet seen a significant increase in consumer prices, there is a risk of rising shipping prices and inflation. The maritime industry is making efforts to address imbalances, which could help central banks facing the challenge of consumer-price inflation. The fragility of global trade has been highlighted by attacks on vessels in the Red Sea, and importers warn that costs may eventually need to be passed on to consumers. Some companies are considering re-shoring production to mitigate the impact of shipping disruptions. The exposure to shipping market cycles is particularly acute for US companies. The increase in shipping prices could drive inflation on goods, and there are already hints of pricing pressures. The latest shipping crunch is occurring as wholesalers and retailers rush to stock up inventory ahead of the back-to-school and holiday shopping seasons. European companies, due to their proximity to the Red Sea, are also feeling the effects of disruptions. However, there are signs that the shipping crunch may be close to peaking, with port congestion in Singapore easing and spot container rates plateauing. Shippers may regain negotiating power, leading to a potential decrease in spot rates. Higher shipping costs are unlikely to be completely passed on to the final purchaser, but this could change in the event of another shock. In the short term, [Extracted from the article]

The US employment report for June reveals that nonfarm payrolls increased by 206,000, slightly surpassing the median forecast of 190,000. Job growth in the previous two months was revised down by 111,000. Government and health care sectors were the primary sources of hiring. The unemployment rate rose marginally to 4.1%, with more people actively seeking work. Women gained 105,000 jobs in June and make up 49.8% of the labor force, while the unemployment rates for Black and Asian individuals increased. Average hourly earnings rose by 0.3% in June, resulting in an annual increase of 3.9%. However, average weekly earnings growth matched April's gain but was the lowest in three years. The median time it takes to find a job increased to 9.8 weeks, the highest since February 2022. Temporary help experienced a decline of 48,900 in June, the most since April 2021. Treasury yields dropped, and S&P 500 contracts fluctuated in response to the report. [Extracted from the article]

According to an analysis by the International Monetary Fund (IMF), the US has captured almost one-third of all global investment flows since the start of the COVID-19 pandemic. This is a significant increase from the pre-pandemic average of 18%. The US has attracted foreign investment due to high interest rates and incentives for renewable energy and semiconductor production. In contrast, China's share of global inflows has more than halved since the pandemic. However, the US advantages may not last, as potential policy changes and a divisive presidential election could impact investor confidence. [Extracted from the article]

The Federal Reserve has signaled that it will cut interest rates less frequently than other central banks, indicating a divergence in monetary policy. While the Bank of Canada and the European Central Bank have already begun easing cycles, the Fed is only anticipating one rate cut this year. This divergence could have implications for the global economy, as higher US interest rates may attract foreign capital away from other economies. However, there is still room for divergence before it becomes a source of market volatility. [Extracted from the article]

The Congressional Budget Office (CBO), a government agency in Washington, conducted an analysis on the US immigration surge and found that the economic impact of immigration is larger than previously thought. The CBO estimated that immigration would contribute $7 trillion to economic growth through 2033 and increase government revenue by $1 trillion. The agency incorporated real-time information from the Department of Homeland Security and estimated that over 860,000 people crossed into the US without being apprehended or turned away in the fiscal year ended Sept. 30. The CBO's findings have influenced the economic debate and prompted revisions to forecasts by banks such as JPMorgan Chase and BNP Paribas. However, some politicians have raised concerns about the fiscal impact on state and local governments. The CBO's nonpartisan analysis has shed light on the topic of immigration, which remains a divisive issue in politics. [Extracted from the article]

The world's three dominant economies, the US, China, and Europe, are entering a combative phase that threatens to deepen fractures and challenge decades of free-market orthodoxy. The US is using trade weapons borrowed from China's playbook, employing tariffs and subsidies to defend its interests. This has put Europe in a difficult position, as it must decide between preserving its role as defender of multilateral rules or protecting its jobs and investments. The trade tensions between these economies have been simmering for years, and there is little hope for a return to consensus and fairness. [Extracted from the article]

Former Federal Reserve Chair Ben Bernanke and former International Monetary Fund Chief Economist Olivier Blanchard, in collaboration with ten central banks, have conducted an analysis on the impact of labor market cooling on central bank inflation targets. They argue that in most countries, reducing vacancy-unemployment ratios is necessary to achieve these targets. The relationship between unemployment and inflation has been controversial, with some economists suggesting that unemployment would need to increase significantly for inflation to cool. However, Bernanke and Blanchard emphasize that wage demands remain an important factor for policymakers to consider. [Extracted from the article]

Rising rents in developed economies like the US, UK, Canada, and Australia are posing a challenge for central banks in their efforts to control inflation. The high housing costs, which have a significant impact on consumer price indexes, are preventing inflation from reaching targeted levels. This could lead to workers demanding higher wages to cope with the rising cost of living, further undermining the fight against inflation. The problem is more pronounced in countries with rapid immigration and housing shortages, such as Australia. In the UK, soaring rents are a major concern for families and a key issue in the upcoming general election. The Bank of England is focusing on pay growth and services inflation, which are currently high. The Federal Reserve is also closely monitoring rental costs as it waits for an opportunity to lower borrowing costs. Rent accounts for a significant portion of the inflation index, making it a major driver of prices. Fed Chair Jerome Powell expects rental costs to eventually impact broader price data, allowing for rate cuts. However, household expectations regarding rent costs have increased, suggesting that Powell may have to wait. Overall, while inflation may moderate, significant cooling is unlikely, according to economists. [Extracted from the article]

The US employment report for April reveals that nonfarm payrolls increased by 175,000, the smallest gain in six months. The unemployment rate rose to 3.9% and wage gains slowed. Job growth slowed in sectors such as leisure and hospitality, construction, and government, while gains were seen in health care, transportation, and retail trade. The number of weekly hours worked decreased, and the number of employees working part-time for economic reasons increased. Stock futures rose and bond yields tumbled in response to the report. [Extracted from the article]

The European Central Bank (ECB) is adopting a meeting-by-meeting approach to its monetary policy decisions, according to Chief Economist Philip Lane. Lane emphasized that the ECB is not pre-committing to a specific rate path and that a data-dependent approach is necessary to account for current uncertainty. While some policymakers have suggested interest rate cuts in June, there is disagreement among officials about the subsequent steps. Lane also highlighted the importance of balancing the risks of moving too soon or too slowly in order to achieve sustainable inflation. The divergence between the rate paths of the ECB and the US Federal Reserve has come into focus, but Lane emphasized that domestic considerations are the primary focus for ECB policymakers. [Extracted from the article]

The European Central Bank (ECB) is adopting a meeting-by-meeting approach to its monetary policy decisions, according to Chief Economist Philip Lane. Lane emphasized that the ECB is not pre-committing to a specific rate path and that a data-dependent approach is necessary to account for the current uncertainty. While policymakers have indicated a potential interest rate cut in June, there is disagreement among officials regarding subsequent steps. Lane acknowledged the need for a balanced approach, as moving too soon or too fast could have negative consequences for inflation and the economy. Recent data shows that euro-area inflation slowed in April, and the ECB expects a gradual decline in inflation going forward. [Extracted from the article]

Major central banks in advanced economies are expected to reverse less than half of the interest-rate hikes they implemented in the past two years, with only 575 basis points of reductions projected by the end of 2025. This outlook has been influenced by the strong performance of the US economy and higher-than-expected inflation readings. The investment landscape has been reshaped, providing opportunities for investors to lock in high yields and make relative-value bets as some central banks ease monetary policy before others. The Federal Reserve, European Central Bank, Bank of England, and Bank of Japan are expected to conduct a cumulative amount of around $3 trillion worth of quantitative tightening by 2025, requiring private-sector investors to absorb government debt. [Extracted from the article]

Major central banks in advanced economies are expected to reverse less than half of the interest rate hikes they implemented over the past two years, according to Bloomberg Economics estimates. The outlook has been influenced by the strong performance of the US economy, disappointing inflation readings, and better-than-expected economic activity. This revised outlook provides opportunities for investors to lock in high yields and make relative-value bets as some central banks ease monetary policy before others. The Federal Reserve, European Central Bank, and Bank of England are projected to reduce interest rates by a total of 575 basis points by the end of 2025, compared to the 1,475 basis points of rate hikes implemented previously. [Extracted from the article]

Congressional passage of a new law granting President Joe Biden the authority to seize Russian dollar assets to aid Ukraine has sparked debate over the potential consequences for foreign demand for US Treasuries and the use of the dollar. The law, known as the REPO provision, allows the president to transfer Russian government assets to a Ukraine reconstruction fund, with some restrictions. Treasury Secretary Janet Yellen praised the law, while European officials expressed concern about the legal precedent. Some US Republicans worry that the law could undermine demand for Treasuries and the role of the dollar in the global financial system. [Extracted from the article]

Global finance chiefs are expressing concerns about the impact of the surging US economy on the rest of the world. The strong US economy, characterized by high interest rates and a strong dollar, is causing other currencies to depreciate and complicating efforts to lower borrowing costs. The Federal Reserve's decision to delay interest rate cuts further has triggered a global government bond sell-off and put pressure on currencies such as the yen. The International Monetary Fund (IMF) has raised its growth outlook for the US, but also warns that the country is "slightly overheated" and its fiscal stance poses risks to the global economy. Finance ministers and central bank governors from various countries are emphasizing the importance of policy independence and expressing concerns about the impact of US actions on global financial markets. Some officials, like German Finance Minister Christian Lindner, have criticized the Biden administration's industrial policies and warned against adopting similar measures. Treasury Secretary Janet Yellen has acknowledged the concerns of South Korea and Japan regarding their exchange rates. While some finance chiefs envy the low unemployment rate in the US, there are concerns about the country's rising debt and the potential consequences of its industrial policy and protectionist measures. The upcoming US election is also seen as a significant factor in shaping global trade dynamics. [Extracted from the article]

Economists and advisors close to Donald Trump are urging him to adopt a flat tax rate, soften his trade stance, and maintain the state and local tax deduction. These proposals come from figures such as Steve Forbes, Larry Kudlow, Stephen Moore, and Arthur Laffer, who emphasize lower taxes to stimulate economic growth. They are lobbying for their preferred economic policies in anticipation of a potential second term for Trump. The advisors suggest a flat 17% tax rate with exemptions, but Trump has not yet expressed support for this idea. The article also mentions negotiations over tax policy that will occur next year, as key portions of Trump's 2017 tax cuts are set to expire. Trump's advisors also advocate for further corporate tax cuts and maintaining or reducing the cap on state and local tax deductions. However, there are disagreements between Trump and his advisors on trade policy, particularly regarding tariffs. Despite these differences, Trump values the economic advice provided by this group. [Extracted from the article]

Federal Reserve Vice Chair Philip Jefferson expects inflation to continue to moderate with interest rates at their current level, but he believes that persistent price pressures may require keeping borrowing costs high for a longer period of time. Jefferson stated that while progress has been made in lowering inflation, the Fed's goal of achieving 2% inflation sustainably is not yet complete. His comments, along with those of his colleagues, indicate that there is no immediate urgency to lower interest rates. Jefferson emphasized the need for the Fed to consider a wide range of data to understand changes in the economy, particularly during uncertain times. [Extracted from the article]

The global economy is currently experiencing short-term optimism with a resilient US economy and signs of growth in the UK and Germany. However, there are concerns about the long-term outlook, as the world faces political and geopolitical risks, growing debt, and increasing inequality. The reconfiguration of the global economy driven by geopolitics and technological change threatens slower overall growth, with gains concentrated in a few wealthy countries. Additionally, the Covid-19 crisis has halted the decades-long era of economic convergence, widening the gap between rich and poor nations. Trade wars, rising inflation, and high levels of debt further contribute to the uncertain and potentially chaotic future of the global economy. [Extracted from the article]

Global manufacturing is slowly recovering from a years-long slump, with China and the US leading the way. Chinese manufacturing has had a strong start to the year, boosting the economic outlook, while US factory activity unexpectedly expanded last month. This recovery is also spreading to other countries, including the UK, Germany, and Asian export powerhouses like South Korea and Japan. While there are still uncertainties and challenges, such as supply chain disruptions and high global interest rates, economists expect continued improvement in global manufacturing. However, it is important to distinguish this cyclical upturn from longer-term realignments and structural shifts in trade. [Extracted from the article]

A new era of global rearmament is underway, posing significant financial challenges for western governments already grappling with unstable public finances. Despite record defense spending of $2.2 trillion in 2023, European Union nations are just beginning to consider the requirements of 21st-century security, including an assertive Russia, a volatile Middle East, and the expansion of the Chinese military. Military budgets may need to reach Cold War levels of 4% of GDP to meet NATO's targets, which would amount to over $10 trillion in additional commitments over the next decade for the US and its Group of Seven allies. This surge in defense spending will have transformative effects on defense companies, public finances, and financial markets. The US and its allies face the challenge of increasing their defenses in eastern Europe while countering China's ambitions in the Pacific. The implications of this rearmament will create a new fiscal paradigm for most NATO members, potentially stalling post-pandemic debt consolidation and forcing painful choices between borrowing, budget cuts, or tax increases. The surge in military budgets is a global phenomenon, with China, Malaysia, and the Philippines among the countries experiencing significant growth in defense spending. The US, despite already having a large military budget, may need to double its spending as a percentage of GDP. The financing of this remilitarization will become a pressing political question, especially with the possibility of a second term for NATO-skeptical Donald Trump. NATO members are unlikely to commit to spending 4 [Extracted from the article]

The US employment report for March showed that nonfarm payrolls increased by 303,000, surpassing expectations. The unemployment rate fell to 3.8%, but Black unemployment rose to 6.4%. Job growth was driven by sectors such as health care, leisure and hospitality, and construction. Average hourly earnings rose as expected, but at the slowest annual pace since mid-2021. The news led to a decrease in Treasuries and an increase in yields, while stocks remained positive. [Extracted from the article]

Labor markets in developed economies are defying expectations by remaining strong, leading to a delay in anticipated interest rate cuts. Factors such as an aging workforce, a shortage of skilled labor, and companies retaining employees are contributing to the high demand for workers. Despite economic slowdowns, the unemployment rate in developed economies remains near record lows. This resilience has caused a sell-off in stocks and bonds. Central banks, including the Federal Reserve and the European Central Bank, are closely monitoring tight labor markets as they consider interest rate decisions. However, inflation remains the primary driver of policy. [Extracted from the article]