Trump Rattles Markets

USD

US President Donald Trump’s latest threat to ramp up tariffs on Chinese goods rattled global markets yesterday at the start of a crunch week of negotiations between the White House and Beijing. Trump tweeted over the weekend that tariffs on $200bn (£153bn) worth of goods from China would be cranked up to 25 per cent this Friday from the current rate of 10 per cent, in a sign that the two sides remain at loggerheads. The dollar strengthened and US Treasury yields also fell as investors turned to low-risk government bonds.

U.S. job growth surged in April and the unemployment rate dropped to a more than 49-year low of 3.6 percent, pointing to sustained strength in economic activity. The report showed steady wage gains last month, consistent with moderate inflation. The decline in the unemployment rate to the lowest level since December 1969 was because people left the labor force, suggesting some slack in the jobs market remains.

Nonfarm payrolls increased by 263,000 jobs last month, amid gains in hiring nearly across all sectors. The economy created 16,000 more jobs in February and March than previously reported. Job growth is well above the roughly 100,000 needed per month to keep up with growth in the working-age population.

GBP

The Pound rallied Friday as optimism over a way forward on Brexit gave sterling a decisive push. This was following a battering in local elections for the two main political parties that could push them toward a Brexit compromise. The Tories and Labour both lost ground in local elections Thursday amid frustration over Brexit, which makes it in their interest to strike a deal. May and Labour leader Jeremy Corbyn both said that the message from the election was to sort out Brexit. On Sunday Theresa May stepped up calls for Labour Party leader Jeremy Corbyn to agree a cross-party deal to leave the EU following poor results for both parties in local elections on Thursday.

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