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Trump may raise auto tariffs soon to increase US production
Donald Trump, the U.S. president, warned on Thursday that he could soon increase auto tariffs. He argued that this would encourage automakers to accelerate U.S. investment. Trump told a White House audience that he might increase the tariffs in the near future. "The higher the tariff, the more likely they are to build a factory here." The White House has been pressed by automakers to lower the 25% tariffs Trump placed on automobiles. Detroit Three automakers criticised a deal which would reduce tariffs on British cars but not those produced in Canada or Mexico. Trump cited a number of recent announcements, including GM's announcement this week that they plan to invest $4 billion into three U.S. factories and shift some SUV production out of Mexico. He also mentioned a $21 Billion Hyundai Investment announced in March, including a new U.S. Steel Plant. Trump stated that "they wouldn't even have invested a penny if there weren't tariffs. This includes the manufacturing of American steel which is doing well." Mexico announced last month that the average tariff on cars exported from Mexico to the U.S. would be 15% and not 25%, because Washington offers automakers discounts for the value U.S.-made content. Tariffs are putting increasing pressure on automakers' costs. Ford Motor Company and Subaru of America raised prices on certain models in recent weeks due to increased costs from Trump's Tariffs. Ford estimated that tariffs would cost them $1.5 billion over the course of the year. GM reported last month that it has a current exposure to tariffs of between $4 and $5 billion. This includes about $2 billion for the cheaper vehicles GM imports, which are made in South Korea. (Reporting and editing by David Gregorio, Jeff Mason, and David Shepardson)
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Trump unhappy with recent rise in oil price
Donald Trump, the U.S. president, expressed his frustration Thursday over rising oil prices amid concerns about supply due to a potential conflict in Middle East. The global and U.S. prices of oil both rose by more than 4% to their highest level since early April on Wednesday before dropping a little on Thursday. Trump stated at a White House gathering that he did not like the fact that oil prices had risen a bit in the past few days. "It will keep going down, right?" We have the inflation under control. Prices rose on news that the U.S. is moving personnel out of the Middle East in preparation for talks with Iran about its nuclear-related activities. Trump claimed that the U.S. is moving personnel to the Middle East because it "could become a dangerous area". He said that the U.S. wouldn't allow Iran to possess a nuclear device. Tehran claims that its nuclear activities are for peaceful purposes. The increased tensions with Iran have raised the possibility of oil supply disruption. Both sides will meet on Sunday.
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Sources say that a decision on the sale of oil refiner Italiana Petroli is expected by end-June.
Italiana Petroli is in negotiations with three parties interested in purchasing the oil refinery and is expected to make a decision around the end this month on the possible 3 billion euro deal ($3.5 billion). Two sources familiar with the matter confirmed that. Sources previously stated that Gunvor, the global commodity trader, State Oil Company of Azerbaijan, (SOCAR), and the Abu Dhabi-based Bin Butti Group had all made binding offers to purchase 100% of the privately held group. Two sources said that industrial groups from the Middle East had contacted the Italian company in order to express their interest, should the ongoing negotiations fail and the seller decide to reopen the process. The Brachetti-Peretti family is asking for around 3 billion euro, according to sources. Italiana Petroli e Gunvor refused to comment. SOCAR Group and Bin Butti Group did not respond to requests for comment. End-December, the refinery had a net cash balance of 408 millions euros. UniCredit is advising the group. It has a total refinery capacity of about 200,000 barrels a day. The group also operates a network with 4,600 fuel stations. The company increased its fuel storage and refining capacity when it acquired Exxon Mobil Italy assets in late 2023. The company currently owns an Ancona refinery, in eastern Italy, the SARPOM refinery, in Trecate, in the north, and a tolling agreement for the Alma refinery, in Ravenna in the north-east. Trecate produces different types of fuels, including aviation propellants, while the two other plants produce bitumen. Intesa Sanpaolo IMI CIB, an Italian company, advises SOCAR. Rothschild works with Gunvor. (1 euro = 0.8633 dollars) (Reporting and editing by Topra Chopra; Additional reporting by Nailia Bakirova, Baku)
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Germany's Bund yield falls to its lowest level since May due to safe-haven flows
Germany's 10-year bond yield fell to a six-week-low on Thursday, as safe-haven flows benefited from market anxiety over trade and tensions with the Middle East. This came a day following soft U.S. Inflation numbers. Germany's benchmark 10-year Bund yield for the Euro zone was almost 5 basis points lower, at 2,486%. It has pared some of its declines since it dipped to its lowest level since early May, at 2.469%. . Yields dropped around the globe on Wednesday, after data showed that U.S. consumer price increases were lower than expected in May due to cheaper petrol and a healthy appetite for U.S. Treasuries at auction. The bond rally on Thursday was supported by a global tone of risk-off after U.S. president Donald Trump announced that the United States will send letters outlining terms of trade agreements to dozens countries in one to two week, which they can accept or reject. Separately Trump stated that U.S. personnel was being relocated out of the Middle East "because it could be a very dangerous place". Stocks fell and safe haven currencies such as the Japanese yen, Swiss franc and other currencies rose. The U.S. Treasury yields continued to fall on Thursday after U.S. weekly claims for unemployment and producer prices data. They were also on course to reach a new low. The euro zone bonds barely responded to the fourth consecutive day of declines. U.S. data released on Thursday revealed that producer prices in May rose 2.6% from the previous year, which was in line with expectations. The analysts at J.P. Morgan warned clients that the Fed will be on high alert for the possibility of future tariffs being passed through to higher prices. We continue to watch for an increase in the consumer price to peak during summer months. Investors in Europe were watching European Central Bank speakers to determine if the rate cut last week was the final one in this cycle. This is despite the ECB's forecast that inflation will fall below the 2% target in 2019. Isabel Schnabel, ECB Executive Board member, said that the interest rates are in a good place because inflation will likely return to its target over the medium-term. Gediminas Simkus, a Lithuanian policymaker, said that interest rates could need to be further lowered this year due to the risk of undershoot. The markets are pricing in another rate cut for this year. The other euro zone bonds moved largely in line with benchmark. Italy's 10-year bond yield fell 4 basis points to 3.42%. Germany's two-year interest rate sensitive yield fell 3 basis points to 1.82%. (Reporting and editing by Alun Pasquini and Linda Pasquini, Kirsty Donovan, Maju Samuel and Kate Mayberry)
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Temasek, BlackRock, and MGX join forces to create AI infrastructure
According to BlackRock's Thursday investor day presentation, Temasek is part of a consortium backed Microsoft, BlackRock, and the tech investment company MGX, which aims to expand and invest in artificial intelligence infrastructure. Slides showed that the Singapore state investment firm has joined AI Infrastructure Partnership. This group also includes BlackRock Global Infrastructure Partners. AIP was formed in September, with the goal of investing more than $30 billion initially in AI-related project. It is one of world's biggest efforts to invest data centres and energy infrastructure needed to power AI apps such as ChatGPT. The aim is to mobilize up to 100 billion dollars, including debt financing, for these investments. They will be focused on the United States. Temasek joins AIP after Kuwait Investment Authority, which joined earlier in June. Kuwait's sovereign wealth fund was the first investor in the consortium who did not have a founding role. Other partners include Elon Musk, Nvidia, and xAI. Ravi Lambah is Temasek’s head of strategic Initiatives. In an email, he said: "Temasek’s investment in AI Infrastructure Partnership reflects Temasek’s focus on the major shifts and trends in the future." He added that "AI could be the most impactful and transformative technology for all businesses and sectors." Temasek has not disclosed financial details about the investment. According to its website, the global investment company's net portfolio had a value of S$389bn ($304bn) by March 31, 2024.
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White House reviews EPA's proposal for biofuel blend obligation
The proposal will impact the oil and biofuels industries as well as major lobbying power. Sources say that the EPA's proposal is expected to cover 2026-2027. Sources: White House is considering a plan to deal with the backlog of requests for refinery exemptions By Stephanie Kelly and Jarrett Renshaw NEW YORK - According to the Office of Management and Budget's website, the White House completed its review of a proposed rule regarding U.S. Biofuel Blending Obligations and has returned it to the Environmental Protection Agency to be further acted upon. Oil and biofuels industries, two major Washington lobbying forces, eagerly awaited the release of this proposal. It will be one of the very first decisions that the Trump administration will make regarding federal biofuel policies. This will provide insight as to whether or not President Donald Trump will support the biofuel industry during his tenure, which at times has been at odds against oil companies. According to U.S. laws, oil refiners are required to blend billions gallons worth of biofuels in the nation's fuel mixture, or purchase tradable credit from those who do. If they can show that the obligations would harm them, small refiners may be able to request exemptions. Previously reported, the EPA will release a proposal covering both 2026-2027. Participants in the industry will focus on proposed mandates to blend biomass-based diesel, because some felt that previous obligations were not high enough. The American Petroleum Institute, a U.S. biofuels coalition, has urged the EPA to propose federal mandates of 5.25 billion gallons for biomass diesel blending in 2026. This would be a significant rise from previous mandates. The coalition, which brought together some oil and biofuels groups in an historically unprecedented move, recommended that the total federal mandate for biofuel blend mandates be 25 billion gallons by 2026. The EPA has set biomass-based fuel mandates at 3.35 billion gallons for 2025. The industry is also waiting for an indication of how the EPA plans to address the outstanding requests by small refineries seeking exemptions from the mandates. Sources have previously stated that the White House is considering a plan to reduce a backlog of requests. This could include approving current applications and asking for input from industry on older ones. There are currently more than 160 requests for exemptions, which could be worth billions of dollars in tradable credit. (Reporting and editing by Margueritachoy, Jarrett Renshaw and Stephanie Kelly)
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The EU's leading legislator on sustainability laws suggests more cuts
The European Union needs to further reduce the number of businesses subject to its corporate sustainability and environmental rules, said the European Parliament Member leading the negotiations on these policies on Thursday. The European Commission announced in February a "simplification package" that would allow European companies to compete more effectively with their foreign competitors by reducing the reporting requirements and obligations for sustainability. According to Swedish center-right legislator Jorgen Warborn who has proposed amendments that would further scale back laws to cover only companies with at least 3,000 employees and a turnover of over 450 millions euros ($521million) he believes these proposals do not go far. The Commission's proposal would exempt all companies with less than 1,000 employees. This is already a significant cut of more than 80% from the approximately 50,000 companies that are currently covered by green reporting regulations. Around 6,000 companies in the EU have more than 1,000 workers. "Europe has fallen behind the U.S.A. and China in global competition for competitiveness. "I'm going into this process with an ambition that is clear: I want to reduce costs for business and go beyond the Commission in terms of simplification," Warborn stated on Thursday. The European Parliament will then negotiate his draft proposal, where other legislators can offer their own amendments. In the next few months, the Parliament will reach an agreement with EU members on the final changes. Warborn is a member of a group of lawmakers from the European People's Party, which leans centre-right. Some right-wingers want to abolish the policies completely, while Socialists and Greens are pledging to keep them. Both the German Chancellor Friedrich Merz and the French President Emmanuel Macron have demanded that the EU abolish the supply chain legislation. Investors and activists have reacted negatively to the move back on ESG regulations. They claim that it undermines corporate accountability, and makes it harder for the bloc to attract investments in order to meet climate goals. Warborn says his changes won't weaken Europe’s sustainability standards but will instead free up resources for companies to invest in innovation. ($1 = 0.8633 euro) (Reporting and editing by Joe Bavier; Kate Abnett)
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US CPC expects ENSO neutral weather conditions in June and August.
The United States Climate Prediction Center announced on Thursday that El Nino-Southern Oscillation neutral conditions will be likely in summer 2025 in the Northern Hemisphere, with an 82% chance of occurring in June-August. ENSO neutral conditions could continue into winter 2025-2026. However, confidence is lower. There's a 48% chance for neutral, and a 41% chance for La Nina. Why it's important La Nina is a part of El Nino-Southern Oscillation, a climatic cycle that affects the water temperatures in central and eastern Pacific Ocean. La Nina causes cooler water temperatures which increases the risk of droughts and floods. This can have an impact on crops. When ENSO neutral, water temperature stays around average, leading to better weather and possibly higher crop yields. CONTEXT The Japanese weather bureau stated on Tuesday that there is a 60% probability of normal weather conditions continuing into autumn. The National Weather Service of the National Oceanic and Atmospheric Administration has forecast above-normal activity for hurricanes in the Atlantic basin during the 2025 season. KEY QUOTES "While ENSO neutrality will have some benefits, the crops will not produce as much as they would under a La Nina setup," Tyler Roys, Senior Forecaster, Lead European at AccuWeather. While the United States has seen a good amount of rainfall in spring, any dry spells that occur in conjunction with high temperatures in July and August could ruin what would otherwise be a great crop year. (Reporting by Anushree Mukherjee in Bengaluru)
Gold increases by more than 2% due to dollar weakness and safe-haven demand
Gold prices increased by more than 2% Monday. This was due to a weaker US dollar and a surge in safe-haven investments after President Donald Trump's new tariffs reignited fears about a global trade conflict.
As of 1144 GMT, spot gold was up 2.3% to $3,313.21 per ounce. U.S. Gold Futures rose 2.4% to $3322.
Gold is more appealing to other currency holders because the dollar index has fallen by 0.4%.
Trump announced on Sunday a tariff of 100% on films produced outside the U.S., but provided little detail on how it would be implemented.
Carlo Alberto De Casa is an external analyst for Swissquote. He said: "The U.S. Dollar is slowing down, and that's a positive thing for gold. More investors are betting the Fed will reduce rates fairly soon, after last week's U.S. Gross Domestic Product data was below expectations and now, with what's happening with oil."
The U.S. Federal Reserve will likely keep rates unchanged on Wednesday. However, the market's focus will be on Jerome Powell, his remarks, and economic projections.
Trump reiterated his call to the central bank for interest rate cuts, saying he would not remove Powell from his position as Fed Board Chair before Powell's term expires in May 2026.
Gold that does not yield acts as a hedge to inflation and global uncertainty. It tends thrive in an environment of low interest rates.
Trump said on Sunday that the U.S. met with many countries including China on trade deals and that his priority for China was to achieve a fair deal.
Goldman Sachs stated in a report that "We expect gold to continue to outglitter silver, with Chinese solar production slowing due a high U.S. risk of recession and central bank gold purchases remaining strong through 2025."
Other metals rose in price, with spot silver up 1.3% at $32.38 per ounce. Platinum was up by 0.1%, to $961.41, and palladium by 0.7%, to $960.13.
(source: Reuters)