The FOMC meeting has been long neglected and is now become focus again. Even though interest rate is expected to keep unchanged in a ratio of 95.8% this time and in Jun is 69.7%, even though the nearest rate cut is expected in the July 31st meeting which is just 57.8%, the announcement of dovish and hawkish attitude will be decisive.
That is people are concerned how Chairman Powell would look upon the future.
How is the actual effect of tariff war on US and China? Practically, Trump disclosed his plan of tariff already during the election campaign. It is not a sudden change. Therefore, a lot of merchants already kept large amount of inventory. They should be enough to stand against the situation for a certain time, depends on various items. Anyway, actual effect will come out in the next few months rather than now. Of course some daily consuming products are easier to find substitute, but still need time to do so.
The trade talk of India and Japan will come to compromise soon and so as other countries. How about the Sino-US talk? US wished to start in the level of highest leader and then spread down to different levels, but China wished to start in basic level and gradually goes up. Some people said they afraid Trump would be crazy again as the insult of Zelensky might re-occur, therefore highest level meeting should put to last moment. Both sides are so firm verbally now, but Reuters got a list of 131 items of exemption from tariff of 125% including airplane engines, semiconductor, and medicine……, up to US$40 Billion. Contacts had been carrying on, but not at highest level. It is not disclosed at which level. The Chinese representative not yet confirmed, for US wished to have someone really can have full power of representation.
Interest rate would not change now, but market is keen to now when will the Fed take action against the current situation. USD gone weak, Asian dollars stronger and Taiwanese dollar gone up sharply against the tariff war.