Deepseek Sparks US Tech Concern; Trump to Hold off on Colombia Tariffs
Bloomberg Daybreak Europe is your essential morning viewing to stay ahead. Live from London, we set the agenda for your day, catching you up with overnight markets news from the US and Asia. And we'll tell you what matters for investors in Europe, giving you insight before trading begins. On today's show, Chinese artificial intelligence startup DeepSeek rocked global technology stocks Monday, raising questions over America's technological dominance. In geopolitics, in the space of several hours that rattled global markets, US President Donald Trump announced sweeping tariffs on Colombia before abruptly pulling the threat after reaching a deal on the return of deported migrants. Today's guests: Neil Sorahan, Ryanair CFO and Tommy Ricketts, BeZero CEO and Co-founder. (Source: Bloomberg)
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Yahoo
8 minutes ago
- Yahoo
Global Rate Limbo Reigns After 150 Days of Trump
(Bloomberg) -- Multiple central banks are set to keep interest rates frozen in the coming week while continuing to gauge the impact of trade disruptions instigated by US President Donald Trump. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban As Part of a $45 Billion Push, ICE Prepares for a Vast Expansion of Detention Space Do World's Fairs Still Matter? From Washington to London, wary officials in countries that account for two fifths of the global economy may display a collective sense of paralysis as they assess risks to inflation and growth from tariffs and stop-start commerce flows. Renewed tensions in the Middle East will only add to their conundrum. Their challenge was articulated on June 3 by the Paris-based OECD, which cut forecasts for global economic expansion while warning that protectionism is adding to consumer-price pressures. The toll that trade tensions are taking on world prosperity is likely to feature when Group of Seven leaders meet in Canada from Sunday. Investors will focus most on the Federal Reserve decision on Wednesday, the eve of Trump's 150th day in power. Observers reckon officials there are still months away from being able to make a settled judgment on the implications of White House policy on the economy. What Bloomberg Economics Says: 'Amid the uncertainty, the FOMC considers the optimal path is to stay put. We expect the median participant to signal just one 25-basis-point cut in 2025, down from two earlier this year — and a sizable minority may see no cuts at all. That's a big gap from market pricing, which still leans toward 50 bps. Powell will try to thread the needle, acknowledging softer data but stressing the Fed is in 'wait-and-see' mode amid policy uncertainty.' —Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins, economists. For full analysis, click here The Bank of Japan, meanwhile, may hold off on a rate move while adjusting bond purchases, and counterparts in the UK and Norway are seen following suit with unchanged borrowing costs. In all, central banks responsible for six of the 10 most-traded currencies in the world are set for decisions. Among them, only those in Sweden and Switzerland are anticipated by economists to tweak rates, with small cuts predicted for each. Peers in Brazil, Chile, Indonesia and Turkey may also deliver no change as policymakers digest domestic developments and international events. Elsewhere, a flurry of Chinese economic data, UK inflation, and several speeches by European Central Bank officials might draw attention in one of the more packed weeks of the year so far. Click here for what happened in the past week, and below is our wrap of what's coming up in the global economy. US and Canada US economic data in the holiday-shortened week include the latest readout of consumer demand. Economists project a decline in May retail sales, primarily due to fewer motor vehicle purchases. Excluding autos and gasoline, however, Tuesday's report is likely to show sales firmed after a soft start to the second quarter. Concerns have been building that flagging consumer sentiment will translate into a sustained pullback in household demand. Also on tap are reports on May housing starts and industrial production. The Fed's production report on Tuesday is seen showing a second month of declining manufacturing output, as factories contend with uncertainty stemming from trade policy. Economists forecast figures on Wednesday will show little change in new residential construction, consistent with a sluggish housing market that's battling various headwinds, including high borrowing costs. For more, read Bloomberg Economics' full Week Ahead for the US In Canada, Prime Minister Mark Carney aims to meet with every world leader gathered in Kananaskis, Alberta, for the G-7 summit that starts in earnest on Monday. UK Prime Minister Keir Starmer said Saturday that Britain will seek to restart trade negotiations with Canada. The Bank of Canada's summary of deliberations will offer new insight into how policymakers are thinking about the future rate path, after they held borrowing costs steady while telegraphing that a cut may be needed if the economy weakens and inflation is contained. Governor Tiff Macklem will also deliver a speech. Population estimates for the first quarter will reveal how the government's efforts to crack down on temporary migration are shaping up, while retail data for April and a flash estimate for May will shed further light on consumers' response to the trade war. Asia It's a big week for central banks in Asia, with most seen holding rates unchanged during a period of uncertainty for trade policy and Middle East tensions. China and Japan will also release a range of economic data. On Monday, Pakistan's central bank is expected to keep rates steady, followed by the BOJ on Tuesday. It's expected to hold after Governor Kazuo Ueda signaled inflation still isn't at target. Investors will focus on what policymakers do about their bond-purchase program, with about two-thirds of respondents in a Bloomberg survey anticipating a slowdown in cutbacks. Bank Indonesia is seen keeping rates unchanged on Wednesday, as is Taiwan on Thursday as its economy endures currency volatility that sent the Taiwanese dollar to the strongest in three years. China is forecast to hold its 1- and 5-year loan prime rates steady on Friday. The Philippines is the only central bank in the region seen cutting — by 25 basis points — as price pressures ease. China on Monday releases a slew of figures on its economy, including home prices, retail sales, industrial production, foreign direct investment, and the jobless rate. Economists expect that retail sales slowed in May from the prior month, industrial activity held up as companies frontloaded manufacturing, and property investment contracted once again. Japan starts releasing a number of important insights on Wednesday, including exports that likely contracted in May — the same for machine orders, as US tariff policy weighed on demand. National consumer prices likely strengthened in the month on a core basis in data due on Friday. May trade figures are also due from India, while Singapore shows electronics exports and Malaysia and Taiwan their overall exports. The data will underscore what's been a tumultuous few months in global commerce as companies attempt to balance tariffs with anticipated customer demand. Elsewhere, Australia likely added fewer people to payrolls in May. New Zealand reports first quarter gross domestic product, seen contracting from the prior year for the fourth quarter in a row, and Sri Lanka also reports GDP. We'll get a look at inflation trends in South Korea with the export prices index and producer prices, both for May. For more, read Bloomberg Economics' full Week Ahead for Asia Europe, Middle East, Africa The BOE announces its rate decision at noon London time on Thursday, the day after UK inflation figures are released. A vote to hold policy at 4.25% is widely expected, despite signs that UK tax increases and US tariffs are weighing on growth and causing job cuts. The concern is elevated headline inflation. Economists expect consumer-price growth to be essentially unchanged at 3.4% on Wednesday – well above the 2% target. Fresh Middle East turmoil after Israel struck Iran's nuclear program poses a fresh risk, with oil prices having spiked following the attack. The Monetary Policy Committee is anticipated by forecasters to vote 7-2 to hold, with two likely dissenters seeking a quarter-point cut. Most expect the BOE to stick with guidance for reductions to be 'gradual and careful,' signaling a quarter-point move every three months. Bloomberg's survey sees three more such steps — in August, November and February — to 3.5%. Several other decisions are scheduled: Sweden's Riksbank was supposed to be done with cuts after reducing its rate by 175 basis points since May 2024. But slower growth and lower inflation readings, combined with Trump's trade jolt in April, mean easing is back on the table for the export-reliant Nordic nation. Of nine economists surveyed by Bloomberg, seven expect a cut on Wednesday, to 2%. In Namibia the same day, officials will also likely reduce their rate at a time when inflation is at the lower end of their 3%-to-6% target band. It's Norway's turn on Thursday. In a rare example of an advanced economy yet to begin post-pandemic easing, Norges Bank is widely expected to keep its rate at 4.5%. Its plan is to begin loosening from the highest level in more than 16 years in the second half. A key business survey backed that view last week. The same day, the Swiss National Bank is widely expected to lower borrowing costs by a quarter point to dissuade haven flows into the franc. That would end almost three years of positive monetary policy, and bring the rate to zero — a level officials haven't touched before, despite their previous foray into negative territory. Botswana may also cut borrowing costs on Thursday to help shore up the economy as inflation is expected to remain low. Turkey's central bank is tipped to keep its rate at 46% the same day. Officials have used other means to loosen policy amid slowing inflation, such as lowering the average cost of funding from nearly 50% to closer to the benchmark rate. A slew of euro-area central banker appearances include the Bundesbank chief on Monday, an event in Milan featuring as many as six Governing Council members on Wednesday, and an address by ECB President Christine Lagarde to a Ukrainian central bank conference on Thursday. Among data highlights, Germany's ZEW investor sentiment survey is released on Tuesday, and euro-zone consumer confidence comes out on Friday. In Israel on Sunday, data may show inflation eased slightly, to 3.5% in May from 3.6% a month earlier. The central bank has kept its rate at 4.5% for more than a year amid escalating regional tensions. Inflation numbers are due in South Africa two days later, with a steady outcome of 2.8% expected. On Thursday, the South African Reserve Bank publishes its biannual financial stability review. For more, read Bloomberg Economics' full Week Ahead for EMEA Latin America Brazil's April GDP-proxy data due Monday comes on the heels of robust first-quarter results. Government handouts to low-income households and a strong labor market, among other tailwinds, are likely to head off any pronounced loss of economic momentum. In Colombia, GDP-proxy data is on tap, along with trade balance and imports for April. The economy's strong start to 2025 obscured some weak data for March, which may be more indicative of what to expect for April. Chile's central bank, led by Governor Rosanna Costa, on Tuesday will likely keep its key rate at 5% for a fourth straight meeting. Local economists surveyed by Banco Central de Chile see a half-point of easing by year-end and a terminal rate to the cycle 50 basis-points lower, at 4%. The same survey has inflation back to the 3% target by year-end 2026. Chile's central bank on Wednesday releases its quarterly inflation report, featuring updated growth and inflation forecasts in addition to revisions to the bank's monetary policy outlook. Brazil's central bank may have gotten enough good news out of the May inflation report posted on June 10 to draw a line under its mini tightening cycle, and keep borrowing costs unchanged Wednesday. That said, policymakers may not be in a hurry to trim the key rate — now at 14.75% — any time soon. For more, read Bloomberg Economics' full Week Ahead for Latin America --With assistance from Robert Jameson, Laura Dhillon Kane, Kati Pohjanpalo, Piotr Skolimowski, Ott Ummelas, Monique Vanek, Abeer Abu Omar, Philip Aldrick, Katia Dmitrieva, Brian Fowler and Vince Golle. (Updates with UK-Canada trade talks in Canada section) American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software New Grads Join Worst Entry-Level Job Market in Years As Companies Abandon Climate Pledges, Is There a Silver Lining? US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom ©2025 Bloomberg L.P. 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Politico
an hour ago
- Politico
Trump has a plan to remake the housing-finance system. It's baffling to many lawmakers and experts.
GOP lawmakers and the mortgage industry are raising questions about the Trump administration's plans to maintain government control over much of the nation's housing finance system, defying expectations that it would back off. President Donald Trump surprised the industry late last month by pledging to take public Fannie Mae and Freddie Mac, the government-controlled companies that stand behind half the $16 trillion residential mortgage market — while preserving an implicit federal guarantee for their solvency. His top housing regulator, Bill Pulte, who oversees the companies, added to the confusion by saying the administration is exploring ways to sell shares while keeping the companies under government authority. The insistence on preserving significant sway over the two mortgage giants, which were seized by the Bush administration during the financial crisis and placed in conservatorship, is setting up a potential rift with Republicans — and possibly even some administration aides who have long worked to reduce the government's footprint in the housing market. 'I want to get them out of conservatorship,' said Sen. Mike Rounds (R-S.D.), chair of the Senate Banking subcommittee with oversight of Fannie and Freddie. 'But I want to be very careful about how we do it, because we need the secondary market, and we need it to work,' he added, referring to the market where mortgage loans are purchased and sold to investors. Rep. Andy Barr (R-Ky.), a member of the House Financial Services Committee, said 'we need to continue to investigate recapitalization and releasing' the companies from government control. The question of what to do with Fannie and Freddie has bedeviled policymakers for decades, with Republicans wanting the government to take its hands off housing finance and Democrats fearing that privatizing the firms would destabilize the market and push up mortgage rates. At stake is a potential windfall of hundreds of billions of dollars for an administration that is staring at massive fiscal deficits. The government holds a roughly $340 billion liquidation preference for the two companies, by one estimate — meaning the money would go to the Treasury Department before anyone else in the event of a sale. Pulte, the director of the Federal Housing Finance Agency, will meet with Treasury Secretary Scott Bessent and Securities and Exchange Commission Chair Paul Atkins on June 17 to discuss the future of Fannie and Freddie, underscoring the importance of the issue. Fannie and Freddie don't make loans themselves, but rather purchase them from mortgage companies and bundle them into securities to sell on the secondary market, freeing up the lenders to make more loans. That, plus the government guarantee, helps keep mortgage rates down, supporters say. Trump was widely expected to support privatization, after his first administration worked to prepare the companies for their eventual release. But his latest comments look more like what former President Joe Biden would do, according to Jim Parrott, a nonresident fellow at the Urban Institute and a former economic adviser in the Obama White House. 'In the Biden administration, you could imagine a version of this,' Parrott said. 'The fact that we're hearing about it in this administration, I think, is catching folks by surprise.' The FHFA responded in an email that it is 'studying how, if the President elects to take Fannie and Freddie public, it can be done in the safest and soundest manner which includes keeping them in conservatorship.' It added: 'In any scenario, we will ensure the [mortgage-backed securities] market is safe and sound and that there is no upward pressure on rates.' White House deputy press secretary Harrison Fields said the administration 'is committed to strengthening the Federal Housing Finance Agency to advance the President's mission of restoring the dream of homeownership for all Americans.' Keeping Fannie and Freddie in conservatorship, according to one shareholder, amounts to attaching 'training wheels' as the government figures out how to monetize its stake. 'I think Pulte has probably confused people more than anything with his message,' said Tim Pagliara, a shareholder and author of the book 'Another Big Lie: How the Government Stole Billions from the American Dream of Home Ownership and Got Caught!' 'So the idea, for example, of allowing these entities to operate in conservatorship is a strategy that they probably talked about with the investment bankers on their primary concern, which is mortgage rates going up,' he added. 'It's like putting training wheels on a bike.' The administration's pronouncements have perplexed housing finance analysts who are unsure of what a scheme to take the companies public while keeping them in conservatorship would look like — or whether there would be sufficient investor appetite to make it worthwhile. JPMorgan strategists wrote in a note that they were 'flummoxed' by the comments. 'It's just hard to imagine why anybody would think there would be strong investor interest in that kind of model, unless the government were to convey they were going to run the [government-sponsored enterprises] in a way that's investor-friendly, and I think we're a long way off from that,' Parrott said. David Dworkin, president and CEO of the National Housing Conference, a stakeholders' group, agreed. 'The most important element of a successful stock sale is a board that is truly independent and has a fiduciary responsibility to shareholders,' he said. 'Under conservatorship, that is actually not even allowed. So, without an independent board with a fiduciary responsibility to the shareholders, there is no value to the stock.' Still, he said, 'there are far too many comments coming from major players, including the president of the United States, to avoid the conclusion that major action on conservatorship could be in the very near future.' Another housing finance analyst, granted anonymity to frankly discuss the nascent plans, also expressed skepticism about the idea that investors would bite on purchasing shares in conservatorship, with the federal government still owning the vast majority of the asset. 'The direction of that control can change at the next election,' the analyst said. 'Each administration has already demonstrated they want to use Fannie and Freddie in different ways, so what are you investing in?' For the most part, Republican lawmakers are keeping their powder dry as they wait for additional details about the administration's plans. '[Senate Banking Committee] Chairman [Tim] Scott looks forward to hearing more' from Trump and Pulte on their plans for Fannie and Freddie, spokesperson Ben Watson said. Asked if conservatorship should end, Sen. John Kennedy (R-La.), a member of the Banking subcommittee with oversight of Fannie and Freddie, said, 'I don't know.' 'We're going to wait until the first quarter of 2026 to have that conversation,' said Rep. Mike Flood (R-Neb.), chair of the Financial Services housing subcommittee. 'Releasing them from conservatorship, that's one thing, but most of the folks I talked to still want the federal government on the hook.' The first Trump administration worked to build capital at the companies to prepare them for the end of conservatorship, an effort led by then-Treasury Secretary Steve Mnuchin and former Federal Housing Finance Agency Director Mark Calabria. Calabria has returned for Trump 2.0, now in a position with the White House Office of Management and Budget. Two key Treasury officials — Jonathan McKernan and Luke Pettit — also hail from the school of thought that Fannie and Freddie should be released from conservatorship. 'The Treasury Department has not really engaged on this yet — so it does not appear to me that the administration is very far into the analysis of options phase,' Parrott said. 'Until the Treasury Department really engages in any of this meaningfully, it's hard to know where all this lands.'
Politico
an hour ago
- Politico
Trump wants to score trade deals in Canada. He's unlikely to get them.
President Donald Trump will arrive in the Canadian Rockies on Sunday for a meeting of the world's economic powerhouses facing a potentially calamitous tariff deadline and a burgeoning crisis in the Middle East. But he's unlikely to leave the three-day summit with a breakthrough on either front. Trump is eager to use the G7 meetings to show progress toward an array of trade deals with the U.S.'s most critical allies. The gathering also takes on heightened importance in the wake of an Israeli attack on Iran that sent oil prices skyrocketing and injected fresh uncertainty into the global economy. But Trump officials are struggling to lock down trade pacts that they predicted were imminent in the wake of a first deal with the U.K. nearly a month ago. Even early chatter of a deal with Japan by this week's conference appears unlikely, said two people close to the White House, granted anonymity to discuss internal deliberations. And now, with the U.S. occupied by turmoil in the Middle East, Trump aides and advisers are tempering expectations for what the G7 may ultimately produce. 'Everybody just wants to survive,' said Ivo Daalder, president of the Chicago Council on Global Affairs and a former U.S. ambassador to NATO. 'There's not a lot of interest in making deals.' In a call with reporters on Friday, a senior U.S. official granted anonymity to preview the summit offered little in the way of specific goals, saying only that Trump sought to 'make progress' in a range of areas including 'making America's trade relationships fair and reciprocal.' The lowered stakes reflect the plodding pace of negotiations with economic partners since April, when Trump blew up their trade ties in pursuit of new deals that he's insisted must be more favorable to the United States. Leaders across Europe are projecting resolve despite the prospect of punishing tariffs come early July. The reduced expectations also underscore how quickly Trump's return to office has fractured the close Western alliance that the U.S. long claimed to lead. Whereas the G7 once prided itself on speaking with one authoritative voice on critical economic and national security matters, most leaders are now just hoping to escape the summit site in Kananaskis, Alberta, without opening a new front in their fight with Trump, diplomatic experts and others involved in the summit preparations said. The G7 countries have already abandoned hopes of signing a traditional joint statement, upending decades of precedent over worries that Trump and his counterparts are too far apart on a number of key issues. The nations instead plan to issue a handful of 'leaders' statements' on more specific issues where all or most of them can reach agreement. The move averts the risk of a repeat of the last Canada-hosted summit, when Trump in 2018 abruptly rejected the statement via an incensed tweet from Air Force One. Back then, negotiators had spent hours haggling over a single word in a line related to trade amid Trump's vows to impose steeper tariffs on allies, said one of the people close to the White House. But shortly after reaching agreement, then-Canadian Prime Minister Justin Trudeau criticized the U.S. tariffs, enraging Trump and prompting him to pull his support. New Canadian Prime Minister Mark Carney has sought to sidestep conflict with the rest of his agenda as well, with multilateral meetings on topics like energy security and drug trafficking aimed at emphasizing areas of common ground. As for the White House, it's shied away from making grand promises. A potential trade deal with Japan is unlikely to be finalized. And while officials cautioned that Trump could always broker a surprise agreement in meetings with other world leaders, there's little expectation that the summit will yield more than commitments to keep talking. 'Everyone's in really different spots in their trade relationships,' one of the people close to the White House said of the several parallel efforts to strike new trade agreements. 'I would be shocked if they came out with anything like the U.K.-U.S. framework in that environment.' Still, Trump and his aides view the G7 as a high-profile opportunity to reassert American primacy over even their closest allies, said advisers and others involved in the global preparations. Trump is likely to jump at any chance to demonstrate his administration's strength on the world stage, even if just rhetorically — forcing the rest of the group to decide when to go along and when to risk confrontation. 'A success on the U.S. side would be going to the summit and being seen as not being pushed around by other leaders,' said Caitlin Welsh, a former senior National Security Council official during Trump's first term. The president may get plenty of opportunities to cultivate that image. In addition to trade issues, Trump's response to Israel's attack on Iran will be closely watched for clues as to whether the U.S. will join the fray. Trump is also likely to face greater pressure to impose sanctions on Russia over its war in Ukraine — a step that he's publicly floated but remains reluctant to take. The president on Thursday said he was 'very disappointed in Russia' over its resistance to peace talks. But he quickly added that he was 'very disappointed in Ukraine also' in a sign of the wide gap between Trump's attitude toward the war and the rest of the G7's steadfast support for Ukraine. President Volodymyr Zelenskyy, who was among those invited by Carney, has vowed to seek another sitdown with Trump at the summit. But even the prospect of a brief meeting has raised some concerns within the G7 over whether it's worth the risk that at any moment Trump and Zelenskyy's relationship could go sideways again — and sink U.S. support for Ukraine in the process. 'The value is only in maintaining the status quo,' Daalder said of discussions with Trump on the topic. But for Trump, the trade war that has consumed his first months in office is just as likely to dominate his three days in Canada. The president is expected to hold a series of bilateral meetings on the summit's sidelines, as the administration tries to push ahead trade deals in differing stages of negotiation. Trump has also tried to up the pressure on his G7 allies, vowing to greenlight a market-rattling return to steep tariffs on July 9 should they fail to clinch agreements in the coming weeks. The push still isn't expected to generate any quick victories in an area where negotiations are often measured in years rather than weeks. Yet allies in the U.S. and abroad are hoping that simply being back at the center of it all, surrounded by world leaders eager for a bit of his time, will prove enough progress for Trump to call off an even more severe trade war. 'He's completely comfortable with an outcome that ends in tariffs,' one of the people close to the White House said. 'But a lot of it depends on whether there's progress being made, and if he feels the countries are serious.' Amy Mackinnon contributed to this report.
