Reuters Morning Report - May 8

A week of important global economic data and event forecasts PDF:

Simplified: here

Traditional: here

The following are major news and market summaries from 5:00 PM on May 7 to 7:00 AM on May 8:

– The Federal Reserve maintains interest rates, stating that the risks of rising inflation and unemployment have increased.

The Federal Reserve kept its target range for the policy interest rate unchanged at 4.25%-4.50%, but noted that the risks of rising inflation and unemployment have increased, further clouding the economic outlook as the Fed seeks to assess the impact of Trump's tariff policies. The Fed's latest statement emphasized the developing risks that may pose difficult choices for the Fed in the coming months. The future policy direction of the Fed will depend on which risk, employment or inflation, escalates first.

• Fed Chairman Jerome Powell reiterated a wait-and-see stance at the post-meeting press conference, stating that rate cuts are possible if data supports it, and that it is not appropriate to take preemptive rate actions at this time. He acknowledged that uncertainty is affecting economic decision-making while reiterating that the economic situation remains good.

• Traders still expect the Fed may cut rates in July.

– Trump suggests that trade talks are initiated by China, unwilling to cut tariffs in exchange for negotiations.

U.S. President Trump hinted on Wednesday that the upcoming high-level trade talks between the two countries were initiated by China, and stated that he is unwilling to cut tariffs on U.S. imports from China in exchange for Beijing coming to the negotiating table. "They say we initiated it? Well, I think they should go back and study their documents," Trump said when asked if he would lower tariffs in exchange for China coming to the negotiating table, to which he replied, "No."

• U.S. Treasury Secretary Mnuchin referred to the trade meetings with Chinese officials starting on Saturday as "negotiations," and when asked if discussions with China are considered high-level talks, he responded, "I said we will begin negotiations with China on Saturday, and I think that is exactly the opposite of 'high-level stage.'"

– The U.S. considers granting tariff exemptions on imported car seats and strollers from China.

U.S. Treasury Secretary Mnuchin stated that the Trump administration is considering exempting car seats, strollers, cribs, and other essential children's travel items imported from China from tariffs as high as 145%.

• Trump stated that he would consider tariff exemption requests from specific industries, but he expressed a preference for broader and simpler trade penalties. Trump made these remarks in response to a question about whether he would exempt tariffs on baby products like car seats.

– Xi Jinping arrives in Russia to support Putin, while Ukraine continues drone attacks on Moscow.

Chinese President Xi Jinping arrived in Moscow on Wednesday for a high-profile state visit. Xi will hold talks with Russian President Putin on Thursday and participate in the 80th anniversary parade commemorating the victory in the Great Patriotic War with other world leaders on Friday. Prior to this, Ukraine warned countries not to participate in Russia's parade, just before Xi's plane arrived, Ukrainian drones attacked Moscow again – The U.S. Department of Commerce announced it will lift the export restrictions on artificial intelligence chips established during the Biden administration.

A spokesperson for the U.S. Department of Commerce stated that the Trump administration plans to revoke the restrictions on the export of advanced artificial intelligence chips imposed by the Biden administration. The spokesperson mentioned that the Biden administration's rules on AI chips are "too complex and bureaucratic" and will be replaced.

• U.S. President Trump hinted at possibly easing chip export restrictions for certain Gulf countries, stating that an announcement will be made "soon." Trump is preparing for his first major diplomatic visit next week, which will include three Middle Eastern countries, starting with Saudi Arabia.

– The People's Bank of China: "Make good use of" existing policies and "intensify implementation" of new policies to consolidate the economic recovery momentum.

The People's Bank of China held a meeting across the system, stating that it will implement a moderately loose monetary policy, make good use of existing policies, and intensify the implementation of new policies to fully unleash policy effects. The central bank's official website published a news release on the meeting to implement the spirit of the April 25th Central Politburo meeting, emphasizing the need for strengthened coordination and close collaboration across the system to continuously consolidate the momentum of economic recovery and promote high-quality economic development.

– The European Union will announce its next countermeasures against U.S. tariffs on Thursday.

EU Trade Commissioner Valdis Dombrovskis stated that if negotiations with Washington fail, the European Commission will announce the details of its next countermeasures against U.S. tariffs on Thursday.

• According to the Financial Times, the EU is considering imposing tariffs on Boeing aircraft.

• U.S. Vice President Pence stated that discussions between the U.S. and Europe are still ongoing. He mentioned that Washington is urging the EU to lower tariffs and regulatory barriers and is opening doors for U.S. arms manufacturers.

– The China Interbank Market Dealers Association issued a notice to innovate and launch technology innovation bonds, establishing a "technology board" in the bond market to guide financial capital to invest early, invest small, invest long-term, and invest in hard technology, creating a financial system that aligns with technological innovation.

– The China Banking and Insurance Regulatory Commission issued a document stating that it will deepen the coordination mechanism to support financing for small and micro enterprises; institutions at all levels should promote the allocation of resources to support small and micro enterprises in foreign trade, private sectors, technology, and consumption.

– India and Pakistan have erupted into the most severe conflict in over 20 years, with Trump calling for both countries to cease hostilities.

On Wednesday, India launched missile strikes against Pakistan and the Kashmir region, with Pakistan vowing to retaliate, claiming to have shot down five Indian aircraft. This marks the most severe conflict between the two nuclear-armed countries in over 20 years. U.S. President Trump called for both countries to stop. The United Nations Secretary-General António Guterres, along with China, Russia, and the UK, also urged both countries to exercise restraint.

• The Indian Embassy in China refuted a post on X by the Global Times claiming that Pakistan shot down an Indian fighter jet, calling it "false information."

– Exclusive: Geopolitical landscape adjustment, Ukraine considers shifting from the dollar to the euro.

Andriy Pyshnyi, the Governor of the National Bank of Ukraine, told Reuters that in the context of global trade fragmentation and Ukraine's increasingly close relations with Europe, Ukraine is beginning to consider moving away from the dollar and may tie its currency more closely to the euro. Pyshnyi stated that the possibility of joining the EU, "the EU's enhanced role in ensuring our defense capabilities, increasing global market volatility, and the potential for global trade fragmentation" are prompting the central bank to reconsider whether to use the euro instead of the dollar as the reference currency for the Ukrainian currency, the hryvnia – Exclusive: The U.S. and Israel discuss establishing a U.S.-led temporary administration for Gaza

According to five informed sources, the U.S. and Israel have discussed the possibility of establishing a post-war temporary administration for Gaza led by Washington. The sources stated that the core of the "high-level" consultations is to establish a transitional government led by U.S. officials to oversee the situation in Gaza until demilitarization and stabilization are achieved, and a viable Palestinian administration emerges.

• Trump stated that more information regarding the hostage release agreement and potential new proposals for a Gaza ceasefire will be announced in the coming days.

– White House Council of Economic Advisers Chair Cecilia Rouse, when asked on Fox News about the Federal Reserve's concerns regarding the renewed rise in U.S. inflation, stated that the Trump administration does not believe this will happen.

– U.S. Treasury Secretary Janet Yellen stated that the International Monetary Fund (IMF) special drawing rights allocation system should serve U.S. interests and should not favor countries with abundant aid funds.

– Goldman Sachs raised its quarterly copper price forecast, citing that easing trade tensions and a recovery in Chinese copper demand may continue to support copper prices in the coming months.

– China's sixth financial asset investment company (AIC) has been established under Industrial Bank, marking the first AIC approved in China in eight years and the first AIC set up by a joint-stock bank.

– According to Chilean newspaper Diario Financiero, Chinese automaker BYD and metal company Tsingshan Group have notified Chilean authorities that they will withdraw their plans to build a lithium processing plant in Chile.

(Market Summary)

Stock Market:

– U.S. stocks closed higher in volatile trading, boosted by reports that regulations on artificial intelligence chips will be relaxed, leading semiconductor stocks to rise in the final hours. The Dow Jones Industrial Average rose by 284.97 points or 0.70% to 41,113.97 points; the S&P 500 index rose by 24.37 points, an increase of 0.43%, to 5,631.28 points; the Nasdaq index rose by 48.50 points or 0.27% to 17,738.16 points. (.NCN)

– European stocks closed lower, pausing after several weeks of strong gains, as investors closely monitored a series of corporate earnings reports ahead of the Federal Reserve's interest rate decision later in the day. The pan-European STOXX 600 index closed down 0.5%, the German DAX index fell 0.58%. The UK FTSE 100 index closed down 0.44%, and the French CAC-40 index fell 0.91%. (.EUCN)

Foreign Exchange Market:

– The U.S. dollar remained strong against major currencies such as the Japanese yen and the euro, after the Federal Reserve maintained interest rates as expected by the market. The dollar rose 1% against the yen to 143.82 yen, breaking a three-day losing streak, while the dollar rose 0.17% against the Swiss franc to 0.8234 francs in volatile trading. The euro traded at 1.1299 dollars against the dollar, down 0.61%, ending three consecutive days of gains. The British pound fell 0.55% to 1.3295 dollars. The Chinese yuan fell 0.24% against the dollar to 7.2274 yuan. (FRX/CN) Bond Market:

• U.S. Treasury yields fell, as the Federal Reserve maintained interest rates as expected but noted that the risks of rising inflation and unemployment have increased. The yield on the benchmark 10-year U.S. Treasury bond dropped to 4.275%, down 4.3 basis points. The 30-year U.S. Treasury yield also fell 4 basis points to 4.773%. The 2-year U.S. Treasury yield was reported at 3.781%, down less than one basis point. (US/NCN)

• Eurozone government bond yields declined as traders awaited the results of the Federal Reserve's policy meeting later that day, marking the first meeting since U.S. President Trump announced tariffs in early April, which caused turmoil in financial markets. The yield on Germany's 10-year government bond fell 5 basis points to 2.48%; the 30-year German bond yield decreased by 7 basis points to 2.95%. Italy's 10-year government bond yield was 3.60%, down 4 basis points, with a spread of 106 basis points compared to German bonds. (GVD/EURCN)

Oil Market:

• Oil prices fell by more than $1 as investors doubted whether the upcoming U.S.-China trade talks would yield breakthroughs, while hopes for a nuclear deal between Iran and the U.S. eased supply concerns. Brent crude futures closed down $1.03 or 1.66%, at $61.12 per barrel; U.S. crude futures closed down $1.02 or 1.73%, at $58.07 per barrel. (O/NCN)

Metals:

• Gold prices fell nearly 2%, weighed down by a stronger dollar and optimism surrounding U.S.-China trade talks. Spot gold dropped 1.9% to $3,364.32 per ounce. U.S. gold futures settled down 0.9% at $3,391.9. (GOL/HCN)

• London copper prices declined as expectations for immediate results from the upcoming U.S.-China officials meeting weakened after months of escalating trade tensions. At 1615 GMT, the benchmark three-month copper price fell 1.2% to $9,420 per ton, having previously reached a high of $9,582 since April 3 during the Asian trading session. (MET/LCN)

(Today's Highlights)

Important Economic Data (GMT time):

• Germany March Industrial Production and Trade Balance (around 0600)

• UK April Halifax House Prices (around 0600)

• Taiwan April Trade Balance (around 0800)

• Hong Kong April Foreign Exchange Reserves (around 0830)

• U.S. Weekly Initial Jobless Claims and Q1 Non-Farm Productivity Preliminary (1230)

• U.S. March Wholesale Inventories (1400)

• South Korea March Current Account Balance (2300)

• Japan March Household Spending, Overtime Pay (around 2330) and End of April Foreign Exchange Reserves (2350)

Major Economic Events and Official Speeches (GMT time):

• Chinese President Xi Jinping visits Russia and meets with Putin (until the 10th)

• State Council Information Office press conference, with Deputy Minister of Justice Wang Zhenjiang and heads of the Legislative Affairs Commission of the National People's Congress, National Development and Reform Commission, Financial Supervisory Authority, and All-China Federation of Industry and Commerce introducing the "Promotion Law of the Private Economy of the People's Republic of China" and answering reporters' questions (0200) – Asia-Pacific Economic Cooperation (APEC) Senior Finance Officials' Meeting (SFOM) (local time May 8-9)

– Bank Negara Malaysia announces monetary policy decision

– Sveriges Riksbank announces interest rate decision and monetary policy report (0730), and holds a press conference (0900)

– Norges Bank announces interest rate decision (0800)

– Bank of England announces interest rate decision, meeting minutes, and monetary policy report (1102)

– Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers hold a press conference to discuss the financial stability report (1500)

Note: For other important financial news, please click (TOP-CMN); for recent Reuters Morning Report, please click (NN/CN)