Trump’s threat to impose high tariffs on China is not sustainable

1) Dollar-won ends higher as trade talks wait-and-see
On Friday night, the dollar-won (REGN) exchange rate closed at around 1,422 won, up about 5 won from the previous day. Market participants are generally watching the trade negotiations between South Korea and the United States. “There has been substantial progress on most issues,” said Yongbum Kim, chief of policy at the presidential office, regarding tariff negotiations. Bank of America said, “The movement to find a trigger for a weak dollar continues. There are few announcements of U.S. economic indicators during the government shutdown, but on the contrary, the announcement of indicators focused on the short period is creating a gap that could amplify foreign exchange volatility.”

2) Trump’s threat to impose high tariffs on China is not sustainable
Ahead of his scheduled meeting with President Xi Jinping, Trump said the threat of high tariffs on China was “not sustainable.” Also referring to Xi, “I get along very well with him.” “I think relations with China will be fine. But fair trade has to be made. It has to be fair.” Treasury Secretary Bessent will meet with Chinese Vice Premier Huibeng in Malaysia to prepare for a bilateral summit. The U.S.-China tariff war has sent import tariffs imposed by the U.S. on Chinese goods soaring by up to 145%. But high tariffs remain suspended, and this one expires on Nov. 10

3) U.S. Regional Banks Efforts to Evolve Credit Concerns
Investors’ anxiety over credit risks in U.S. regional banks is somewhat subdued. The KBW regional bank index partially recovered from its plunge of more than 6% the previous day, as some regional banks’ provisions for bad debt were lower than market estimates. “The overall credit health is good,” said Truist Financial’s chief executive. “The recent events in the market are less correlated and appear to be individual cases limited to some specific companies.” However, he added that he is managing his credit risk with a “very high level of vigilance.”

4) CEO Carlisle Says ‘There’s No Sign Of Worsening Credit Problems Right Now’
Harvey Schwartz, CEO of Carlyle Group, diagnosed that although the recent volatility in the credit market is worrisome, there is no sign of deterioration at this time. He said that if you look at the companies in Carlyle’s portfolio, “they are growing, employment is stable, inflation is somewhat sticky, and there is no sign of collapse right now.” However, he pointed out that “they have no choice but to be on the list of concerns” during the economic slowdown. Meanwhile, creditors are reportedly considering bankruptcy pressure after PrimaLend, an auto dealer financial firm targeting subprime customers, failed to repay its debt for months

5) $1.4 Trillion U.S. Bond Owners Overshadowed by Base Trade
Researchers at the Fed say that hedge funds in the Cayman Islands are likely to hold more U.S. bonds by 1.4 trillion dollars than the official U.S. statistics. They point out that the holdings of these funds will increase by $1 trillion after 2022, reaching $1.85 trillion as of the end of 2024. The reason for the difference is that the official data of the Treasury Department did not properly reflect the base trade. The researchers analyze that hedge funds purchase U.S. bonds through borrowing in the repurchase agreement (repo) market for such transactions and provide them as collateral
(자료: Bloomberg News)