Daily Brief Macro: CHINA TARIFFS: Fact and Fiction and more

• The US has ramped up its tariff threats months before Trump even takes office.  The newly appointed trade representative is a China hawk with some questionable policies ideas.
• China has reduced its dependency on US exports by half over the last several years and is better prepared to handle trade negotiations.
• Although previous trade negotiations during Trump’s first term lasted more than a year, most of the tariffs were never imposed. 

• The US has ramped up its tariff threats months before Trump even takes office. The newly appointed trade representative is a China hawk with some questionable policy ideas. 
• China has reduced its dependency on US exports by half over the last several years and is better prepared to handle trade negotiations.
• Although previous trade negotiations during Trump’s first term lasted more than a year, most of the tariffs were never imposed.

• Last week, we missed an intriguing story that several clients have asked us to explore.
• China issued $2 billion worth of USD-denominated bonds, which might not seem groundbreaking at first glance—it’s not uncommon for China to issue bonds in dollars.
• However, two aspects of this issuance stand out:The Venue: These bonds weren’t issued in the typical financial hubs like New York or Shanghai but in Riyadh, Saudi Arabia—a first of its kind.

• JP Morgan’s base case outcome for 2025 euro rate outlook is positive, with a focus on growing euro economy and inflation reaching 2%
• French political uncertainty may cause modest widening in intra-EMU spreads, but overall outlook remains positive
• German swap spreads expected to stay range bound with modest widening bias, driven by technical flows and repo rates

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• AI boom reflected in record fund ownership in ASML Holding NV (ASML NA), NVIDIA Corp and Taiwan Semiconductor (TSMC) (2330 TT).
• The ‘Magnificent 7’ group of stocks have hit a record underweight of -6.83% below the MSCI ACWI index.  They collectively account for 11.2% of the average Global fund.
• Recovery Stocks: The old guard of At&T Inc (T US), International Business Machines (IBM US) and General Electric (GE US) appear to be gathering some support from active Global funds.

• Gloomy PMI data increasingly appear noisy as the equivalent ESI surveys broadly reveal resilient output and employment across sectors and countries.
• Price expectations are also at or above their long-term averages, signalling sticky inflationary pressures rather than any dovish shock to below-target levels.
• The ECB faces a consistent hawkish signal in a mirror of the dovish dataset that pushed it to cut in October. It should resist a 50bp cut in December, supporting EURUSD.

• For the week ending 22/Nov, US crude inventories fell by 1.8m barrels, beating expectations of a 1.3m barrel decrease. However, gasoline and distillate stocks rose more than expected.
• US natural gas inventories fell by 2 Bcf for the week ending 22/Nov, missing analyst expectations of a 4 Bcf decline. Inventories are 7.2% above the 5-year seasonal average.
• Analysts raised their 12-month price targets on Chevron while trimming their targets for Exxon and Occidental. Both JP Morgan and Morgan Stanley reiterated their Overweight ratings on Reliance Industries.

• Insurers / In Depth: China’s insurers prepare to shine a light into their financial black box
• Plastic /: China proposes U.N. plastic pollution treaty ‘respect nations’ circumstances’
• Stocks /: Why Trump’s rise sounded like a sure bet for China’s small-cap stock investors