President Trump's tariffs policy given a reprieve

US President Donald Trump’s tariffs strategy will remain in place for now after a federal appeals court blocked a ruling by a trade court earlier in the week that they were in most part illegal and would have to be ceased. The White House has continued to push back against the court’s earlier ruling and will contest any attempt to block its economic strategy.

In data from the US, Q1 annualised q/q contraction was modestly smaller than initially stated at -0.2% rather than -0.3% on the initial print. Meanwhile, the weekly initial jobless claims figure ticked up to 240,000 in the week to May 24, up from 226,000 the previous week and higher than the predicted 230,000. Continuing claims in the week prior tose to 1.919mn from 1.893mn previously. This was the highest level since November 2021, indicting a potential slowdown in the labour market.

Today’s Economic Data and Events

11:00 Spain CPI inflation, % y/y, April. Forecast: 2.5%

13:00 Italy CPI inflation, % y/y, April. Forecast: 1.9%

Fixed Income

• Another strong auction for USTs, this time for 7yr notes, saw yields fall across the curve yesterday. The 2yr ended the day 5bps lower at 3.9386%, while yields on the 10yr fell 6bps to 4.4180%.
• Kuwait’s Boubyan Bank issued a USD 500mn unsecured 5-year sukuk yesterday, with the spread at +95 compared with the initial guidance of +130. The order book was USD 1.7bn.
• Ratings agency Moody’s has upgraded Emaar Properties’ long-term issuer ratings to Baa1, from Baa2 previously, citing ‘a robust foundation, a proven track record across multiple real estate cycles, and consistently strong operational and financial performance.’

FX

• The dollar index fell 0.6% yesterday as uncertainty around the tariffs policy from the US returned to the fore. EUR was a notable gainer as it rose 0.7% to 1.1370, while CHF added 0.5% to 0.8230. GBP closed up 0.2% at 1.3492.

Equities

• There were solid gains in Asian equity markets yesterday following the trade court ruling in the US the previous day. The Hang Seng closed up 1.4% while the Shanghai Composite ended the day 0.9% higher. In India, the SENSEX closed 0.4% higher.
• The momentum stalled later in the day, with indices in Europe lower. The CAC fell 0.1% and the DAX 0.4%. There were modest gains in the US where the Dow Jones added 0.3% and the S&P 500 and the NASDAQ both closed 0.4% higher.

Commodities

• Oil prices fell back once more yesterday after President Trump’s tariffs policy was given a reprieve. Brent futures ended down 1.2% at USD 64.2/b, while WTI dropped 1.5% to USD 60.9/b.