May 19, 2025, 08:32 GMT+2 A look at the day in European and global markets by Wayne Cole: The Asian session has so far been negative: retail sales below expectations in China have highlighted the distance the country must travel to shift from an export-based economy to one driven by domestic demand. It is clear that consumers do not feel like buying and it is not obvious that Beijing wants to change things. Meanwhile, US President Donald Trump is telling Americans they need to live with fewer dolls and pencils, while at the same time promoting trade policies that indirectly push Chinese consumers to buy more. US Treasury Secretary Scott Bessent has invited potential trade partners to propose deals "in good faith" if they don't want to risk receiving a tariff rate letter. He also hinted that the US only has time to negotiate with the top 18 trading partners and that the rest may depend on which way the wind blows. The effective tariff on US imports remains around 13%, the highest since the 1930s, equivalent to a tax increase of 1.2% of GDP, which Trump is asking Walmart WMT to absorb by reducing margins rather than passing it on to customer voters.
The effective tariff on US imports remains around 13%, the highest since the 1930s, equivalent to a tax increase of 1.2% of GDP, which Trump is asking Walmart WMT to absorb by reducing margins rather than passing it on to customer voters. It will be interesting to see what Target TGT, Lowe's and Home Depot will have to say this week about this idea, which smacks of state price fixing in a Soviet-style command economy.
It will be interesting to see what Target , Lowe's and Home Depot HD will have to say this week about this idea, which smacks of state price fixing in a Soviet-style command economy. Trump needs the revenue from tariffs, in part, to fund his tax cut package, which has finally passed a House committee and could be voted on during the week. According to estimates, this very large project will add between $3 trillion and $5 trillion to the national debt over a decade, and it was one of the reasons why Moody's also downgraded the United States last week. Ratings have not mattered much since the financial crisis, when the subprime debacle tarnished the reputation of some agencies and funds abandoned triple-A mandates. However, the news seems to have hit foreign investors, already bewildered by the erratic nature of US policy, and today Wall Street futures are down 1% or more. Ten-year yields are up about 5 basis points and the dollar is down, albeit modestly. For their part, euro bulls will be relieved by the surprise victory of a pro-EU candidate in the Romanian elections, as well as by the victories of centrist parties in Poland and Portugal. The main developments that could influence markets today: - Final EU CPI data for April - Among the Fed speakers are Atlanta Fed President Raphael Bostic, Vice Chair Philip Jefferson, New York Fed President John Williams, Dallas Fed President Lorie Logan, and Minneapolis Fed President Neel Kashkari.
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