21st May 2025

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Oil prices spiked and havens caught a bid after CNN reported, citing US officials, that new intelligence suggests Israel is preparing a possible strike on Iranian nuclear facilities in what would be a brazen break with US President Trump, although there is internal disagreement in the US government on the likelihood of an attack. (CNN)

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TRADE:

• China said it could take legal action against anyone enforcing US restrictions on using Huawei Technologies Co.’s AI chips, escalating a dispute that’s upset a tentative truce on tariffs. (BBG)
• Bookings on freighters from China to US shores more than doubled to about 228,000 TEUs in the week beginning May 12, when the US and China agreed to sharply reduce tariffs for 90 days. (BBG)
• The US Commerce Department set the stage for anti-subsidy duties on imports of key battery components from China, after concluding materials had been unfairly subsidized. (BBG)
• Canadian Finance Minister Francois-Philippe Champagne says G-7 countries are discussing tariffs on oversupplied, low-value Chinese products. (BBG)
• Companies importing goods into the US from China are rushing to convert warehouses into facilities that are exempt from Trump's tariffs until they are ready to sell the merchandise. (RTRS)
• Japan’s exports to the U.S. fell in April for the first time in four months as the effects of higher tariffs started to kick in. (WSJ)
• Some of Japan's largest companies, including Toyota, Sony and Mizuho, have said they could suffer a total hit to profits as high as ¥4tn ($27.6bn) due to US tariffs, according to FT calculations. (FT)
• UK Chancellor Reeves will hold talks with US Treasury Secretary Bessent this week, as the two countries continue to finalize the details of an agreement to cut tariffs imposed by Trump’s administration. (BBG)
• South Korea’s early trade data showed exports falling again this month especially to the US as negotiations between Seoul and Washington continue over tariffs on shipments from the Asian nation. (BBG)

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MACRO:

• The IMF chief has said in an FT interview that U.S. fiscal deficits are too large and the country needs to tackle its "ever-increasing" debt burden. (FT)
• The House GOP's blue state holdouts are close to a deal on the "big, beautiful bill" that would raise the state and local tax (SALT) deduction cap to $40k a year for people making up to $500,000 a year, according to Axios sources. (Axios)
• The best thing for the Fed to do now is to wait before making any further policy decisions given the uncertainty around the impact of Trump administration policies, Fed's Hammack and Daly said in a joint appearance. (RTRS)
• Fed's Bostic said US businesses may have run out of strategies to delay changing prices or employment in response to higher import taxes, with the economy possibly on the brink of a wave of price increases. (RTRS)
• Trump's approval rating ticked slightly lower this week to 42%, matching the lowest level of his new term as Americans kept a dour view of his handling of the U.S. economy, according to a new Reuters/Ipsos poll. (RTRS)
• Donald Trump’s administration is debating an executive order that could open the nearly $9tn US retirement market to private capital groups focused on corporate takeovers, property and other high-octane deals. (FT)
• Trump says $175bn ‘Golden Dome’ will be completed during his term. (FT)
• Morningstar data showed European and Asian investors pumped record sums into global equity funds that exclude the US market after Trump’s return to the White House. (FT)
• Japanese manufacturers were less confident about business conditions in May compared with April and they expect sentiment to weaken over the next three months as changing U.S. tariff action saps optimism, a Reuters Tankan poll showed. (RTRS)
• Long-dated Japanese government bonds saw little relief on Wednesday after a poor auction result sent yields to record levels and as more debt sales loomed in the weeks ahead. (RTRS)
• Japan’s farm minister quit Wednesday after saying he’s never needed to buy rice, a comment that fueled criticism of PM Ishiba’s minority government and its handling of rising food prices ahead of an election. (BBG)
• UK inflation jumped to a higher-than-expected annual rate of 3.5% in April from 2.6% in March, above the expected 3.3%. April saw increases in gas, electricity and water prices, alongside higher taxes on employers - all of which are likely to push up prices. (RTRS)
• UK Deputy PM Rayner wrote to Chancellor Reeves shortly before the Spring Statement to make the case for big tax increases, according to a leaked memo seen by The Telegraph. (The Telegraph)
• The Hong Kong dollar edged closer to the weak end of its trading range as sliding local interest rates encouraged traders to increase their borrowing of the currency to fund carry trades. (BBG)
• Hong Kong's rich families are being forced to sell their homes to cut debt due to market downturns. (BBG)
• A third-party arbiter proposed a higher wage offer to South Africa’s state-owned ports and rail company and its unions in a bid to stave off a potential strike by thousands of logistics workers. (BBG)
• Goldman Warns Europe’s Gas Refill at Risk if Prices Drop Further. (BBG)
• Global gas giants are betting the current lull in Chinese gas demand is temporary, and that the country will underpin their multibillion-dollar investments for years to come. (BBG)
• US lawmakers are pressing Northern Ireland to approve an American-owned gold mine potentially worth billions of pounds to the local economy, warning that delays to the project risk driving away foreign capital. (FT)
• An IEA report notes critical mineral supplies are increasingly concentrated in a handful of countries, with the threat of disruption growing as export bans multiply and diversification efforts face stiff hurdles. (WSJ)

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GEOPOLITICS:

• Oil prices spiked and havens caught a bid after CNN reported, citing US officials, that new intelligence suggests Israel is preparing a possible strike on Iranian nuclear facilities in what would be a brazen break with US President Trump, although there is internal disagreement in the US government on the likelihood of an attack. (CNN)
• The US and the Philippines held a new round of joint sails within Manila’s exclusive economic zone, with their coast guards participating for the first time, amid continuing tensions in the disputed South China Sea. (BBG)

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EQUITIES:

• Elon Musk, in a CNBC interview, said it's "not out of the question" to merge his AI startup with Tesla if shareholders approve. He said AI data centers could face power capacity issues the middle to end of next year. He also said the robotaxi service test is on schedule to bein in Austin, Texas, by the end of June. (CNBC)
• Elon Musk said xAI plans to build a 1-million GPU facility outside Memphis, Tennessee and will buy more chips from Nvidia and AMD, and possibly others. (CNBC)
• Nvidia CEO Huang said Biden-era U.S. export controls on AI chips to China were "a failure" as they have cost American companies billions of dollars in lost sales, praising Trump for a walk back on the diffusion rules. Huang also made a note of the "really intense" competition in China, forecasting the country's AI market next year reaching $50bln. (RTRS)
• Super Micro Computer plans to expand its server production capacity in the U.S. as global demand for artificial intelligence accelerates, its chief executive officer said to the WSJ. (WSJ)
• Kraft Heinz said it was looking at strategic transactions as demand weakens in an uncertain economic environment. The company also said Timothy Kenesey and Alicia Knapp, executives at Berkshire Hathaway-owned companies, were leaving its board. (RTRS)
• Ford Motor is pulling back more on its electric vehicle ambitions, letting rival Nissan use part of its flagship U.S. battery plant, according to WSJ sources. (WSJ)
• Fortnite has returned to Apple's App Store in the US after more than four years, following a legal battle between Epic Games and Apple. (BBG)
• US life insurers have shifted more than $1tn of liabilities offshore, offloading more risk to foreign jurisdictions despite regulators’ concerns about protections for retirement savings and broader financial stability. (FT)
• The FAA said it would require flight cuts at Newark after it met with U.S. airlines to address congestion issues following a series of major disruptions. (RTRS)
• Toll Brothers reiterated its outlook for the year despite soft demand in its latest quarter, and its chief executive said long-term trends for its luxury homes remain positive. (WSJ)
• Robinhood plans to take on UK investment platforms such as Hargreaves Lansdown by launching a stocks-and-shares Isa with no fees before the end of the tax year. (FT)
• David Webb Warns About CATL’s Low Free Float in Hong Kong. (BBG)
• ASUS co-CEO Samson Hu believes the new crop of AI-powered PCs will not drive the market forward until 2026 or later. (BBG)
• TSMC has declined invitations to build fabs in 3 nations, Qatar, Singapore and India, despite strong offers, according to Asian press citing unnamed supply chain sources, who add Qatar has been most aggressive and is considering raising its subsidy offer. (DigiTimes)
• Quanta, the AI server giant, sees triple-digit growth for AI server sales this year, and said capacity is now full. (CTEE)
• A group of advisers to the FDA said Roche Holding AG needs to study its blood cancer treatment in more American patients before its use can be expanded. (BBG)

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