From Washington to London, more than a dozen central banks will hold policy meetings this week, with the economies they represent accounting for two-fifths of the global economy. Among them, in addition to the highly anticipated US Fed, another G10 central bank's policy meeting this week will also attract widespread attention: the Swiss National Bank (SNB), which has been continuously pushing global interest rates to new lows. According to industry surveys of economists, the SNB is likely to cut interest rates to zero this week and maintain them at this low level for some time. Nearly 80% of the surveyed economists expect that SNB policymakers will lower borrowing costs by 25 basis points to 0% this Thursday. This move will return the benchmark interest rate to a level not seen since September 2022, when the SNB just ended its seven-year negative interest rate policy. And this will also become the lowest interest rate among major economies globally at present. Among the 22 forecasting institutions surveyed, only three institutions—Pantheon Macroeconomics, Capital Economics, and Swiss Life Asset Managers—predict that the SNB will directly cut interest rates by 50 basis points to -0.25% this week. Another six institutions, including Goldman Sachs, Nomura, and Barclays, expect the SNB to enter "negative interest rate" territory in September, but most surveyed institutions believe the easing cycle will end in June. SNB officials can cite the country's extremely weak CPI growth as a reason for a sixth consecutive interest rate cut: Last month, Switzerland's inflation rate turned negative for the first time since early 2021. Meanwhile, economists surveyed by the industry predict that the average annual inflation rate will be only 0.3% this year and 0.6% in 2026. In addition, exchange rate fluctuations may also be one of the factors considered by the SNB this week. SNB policymakers are trying to take measures to curb capital inflows into the Swiss franc. Since US President Trump announced "Liberation Day" tariff measures in early April, the Swiss franc has appreciated more than 8% against the US dollar. Since then, the Swiss franc has also continued to appreciate against the euro, a currency pair of particular concern to the SNB. The strength of the Swiss franc has pushed down import costs and the consumer price index. It is worth mentioning that although SNB President Martin Schlegel stated in mid-May that officials had had productive discussions with Washington on central bank exchange rate intervention measures, the US Treasury still included Switzerland in its list of economies closely monitored for exchange rate policies in its semi-annual report on exchange rate policies last week.

A day after US CPI inflation for May came in below expectations across the board, the overall increase in the US Producer Price Index (PPI) for May, released on Thursday, remained mild, suggesting that tariffs have not yet imposed higher inflationary pressure on consumers and further boosting expectations for a US Fed interest rate cut in September. According to a report issued by the US Bureau of Labor Statistics, the US PPI year-over-year (YoY) rate for May was recorded at 2.6%, in line with market expectations of 2.6%; the US PPI month-over-month (MoM) rate for May was recorded at 0.1%, below the market expectation of 0.2%. Excluding the more volatile food and energy categories, the core PPI for May rose 3.0% YoY, the lowest level since August 2024 and below the expected 3.1%; it increased 0.1% MoM, below the expected 0.3%. The PPI measures inflation from the producer's perspective, reflecting the price conditions of goods purchased during the production process. Changes in the PPI can predict future price movements, making this indicator highly valued by the market. Data showed that wholesale energy prices remained largely unchanged, although gasoline prices rose 1.6% MoM. After a 0.9% decline in April, wholesale food prices rose 0.1% MoM in May. The highly watched price of eggs increased by 1.4%. Since taking office earlier this year, Trump has imposed a baseline tariff of 10% on all trading partners and varying tariffs on steel, aluminum, and automobiles. US importers will pay these taxes and, where possible, pass them on to consumers through price increases. Although the current impact of higher tariffs on the US public is not yet significant, economists point out that price pressures may intensify in the second half of the year as companies attempt to avoid further weakening of profit margins. Stephen Brown, an analyst at Capital Economics, noted that wholesale prices can provide an initial insight into the direction of consumer inflation, as some of its components are used to calculate the Fed's preferred inflation indicator, the PCE data. Carl Weinberg, chief economist at High Frequency Economics, wrote, "Today's data show that the Fed has no reason to discuss raising interest rates. In fact, if Trump's tariff policies had not been implemented, the Fed might even consider cutting interest rates to stimulate the economy." Meanwhile, another set of data released by the US Department of Labor showed that the number of initial jobless claims for the week ending June 7, seasonally adjusted, remained steady at 248,000, compared with market expectations of 240,000, the highest level since last October. The number of continuing jobless claims jumped to 1.951 million, the highest level since November 2021, indicating that it is becoming increasingly difficult for the unemployed to find new jobs. According to the CME Group's FedWatch Tool, the probability of an interest rate cut in September stood at 80%, up from 70% the previous day.

SMM News on June 9: Metal Market: As of the daytime close, domestic market base metals generally rose, with SHFE zinc leading the declines with a 1.79% drop. The % changes of the remaining metals were all within 1%. SHFE lead and SHFE nickel both rose by over 0.4%, with SHFE lead up 0.48% and SHFE nickel up 0.47%. The main alumina contract fell by 1.47%. In addition, the main lithium carbonate contract fell by 0.16%, the main silicon metal contract rose by 2.33%, and the main polysilicon contract fell by 2.24%. The main European container shipping contract fell by 2.55%. In the ferrous metals series, most prices fell, with iron ore down 0.71% and stainless steel down 0.47%. HRC and rebar both fluctuated slightly. In the coking coal and coke sector, coking coal rose by 0.13% and coke fell by 1.22%. In the overseas market, as of 15:05, overseas market base metals collectively rose except for LME zinc, which fell by 0.26%. LME copper, LME aluminum, and LME tin all rose by over 0.4%, with LME copper up 0.44%, LME aluminum up 0.43%, and LME tin up 0.44%. In the precious metals sector, as of 15:05, COMEX gold fell by 0.14%, while COMEX silver rose by 0.75%, hitting a high of $36.525 per ounce during the session, a new high since March 2012, and recording four consecutive days of gains. Domestically, SHFE gold fell by 1.02%, while SHFE silver rose by 1.77%, hitting a high of 8,912 yuan/kg during the session, a new all-time high since its listing. Market conditions as of 15:05 today 》Click to view SMM Market Dashboard Macro Front Domestic Aspects: [General Administration of Customs: China's Foreign Trade in Goods Grew 2.5% in the First Five Months, with Exports Up 6.3% YoY in May] The General Administration of Customs announced today (the 9th) that in the first five months of this year, China's total foreign trade in goods reached 17.94 trillion yuan, up 2.5% YoY, continuing the growth trend. In May, imports and exports totaled 3.81 trillion yuan, up 2.7%. In May alone, China's exports reached 2.28 trillion yuan, up 6.3%. Among them, exports to ASEAN, the EU, Africa, and the five Central Asian countries increased by 16.9%, 13.7%, 35.3%, and 8.8%, respectively. In the first five months of this year, China's exports of equipment manufacturing products reached 6.22 trillion yuan, up 9.2%, accounting for 58.3% of China's total exports. Among them, exports of EVs increased by 19%, construction machinery by 10.7%, ships by 18.9%, and industrial robots by 55.4%. In the first five months, China's equipment manufacturing products contributed 73% to the overall export growth, with the contribution rate reaching as high as 76.9% in May, providing strong support for the stable growth of foreign trade. 》Click to view details SMM has compiled data on the import and export of some products in the metal industry based on data released by the General Administration of Customs, as detailed below: 》Click to view detailed data [National Bureau of Statistics (NBS): CPI declined slightly in May, while the YoY increase in core CPI widened, and PPI fell 0.4% MoM] In May, the Consumer Price Index (CPI) fell 0.2% MoM and 0.1% YoY. Excluding food and energy prices, core CPI rose 0.6% YoY, with the increase widening by 0.1 percentage points from the previous month. The Producer Price Index (PPI) for industrial products fell 0.4% MoM, with the decline remaining the same as the previous month, and decreased 3.3% YoY, with the decline widening by 0.6 percentage points from the previous month. China is boosting consumption with greater intensity and more targeted measures, fostering the growth of new quality productive forces, improving the supply-demand relationship in some areas, and witnessing positive changes in prices. 》Click to view details ► On June 9, the central parity rate of the RMB exchange rate in the inter-bank foreign exchange market was 7.1855 RMB per US dollar. US dollar: As of 15:05, the US dollar index fell 0.28% to 98.94. The US added 139,000 non-farm payroll jobs in May, higher than the expected 126,000 but significantly lower than the previous 177,000, marking the lowest level since February this year. The US unemployment rate in May was 4.2%, in line with expectations and the previous reading. The year-on-year growth rate of average hourly earnings in the US in May was 3.9%, higher than the expected 3.7%, with the previous reading revised up to 3.9%. The market has scaled back its bets on interest rate cuts and now expects one in October. Meanwhile, US President Trump stated that he would soon announce his decision on the next Fed Chairman, adding that a "good Fed Chairman" would lower interest rates. The market expects the US Fed to keep interest rates unchanged at its June 17-18 meeting, with policymakers assessing how tariffs will impact the economy. According to the CME Group's FedWatch tool, federal funds rate futures traders currently expect a 61% probability of an interest rate cut by the Fed in September or earlier, compared to 74% on Thursday. Macro: Today, data such as the global leading indicator for the turning point of the industrial production cycle in May, the final value of the US wholesale inventory monthly rate in April, the 1-year inflation expectations of the New York Fed in the US in May, and the 3-year inflation expectations of the New York Fed in the US in May will be released. In addition, it is worth noting that, at the invitation of the UK government, He Lifeng, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, will visit the UK from June 8 to 13. During this period, the first meeting of the China-US economic and trade consultation mechanism will be held with the US side. Crude oil: As of 15:05, oil prices in both markets fell simultaneously, with US oil down 0.2% and Brent oil down 0.26%. Oil prices fell on Monday, but the decline was limited, and most of the gains from last week were retained. The prospect of a China-US trade agreement boosted the risk appetite of some investors and supported oil prices. Tim Evans of Evans Energy said in a report, "Over the past week, Brent crude oil rose to near the top of its recent trading range as equity market risk appetite increased amid easing tariff concerns, encouraging buying." The US non-farm payrolls report showed that the unemployment rate held steady in May, which seemed to increase the likelihood of a US Fed interest rate cut, further supporting the oil price rally last week. Data released on the website of the General Administration of Customs on June 9 showed that China's crude oil imports in May were 46.6 million mt, and cumulative imports from January to May were 229.615 million mt, up 0.3% YoY. After OPEC announced a significant production increase again in July on May 31, the prospect that the China-US trade agreement could support economic growth and increase oil demand outweighed concerns about increased OPEC supply. A research report released by HSBC on Friday stated that it is expected that OPEC+ will accelerate supply increases in August and September, which may increase the downside risk to the bank's forecast of a Brent crude oil price of $65 per barrel in Q4 2025. A research report by Capital Economics stated that it believes that this new accelerated production increase by OPEC+ will continue. ING analysts led by Warren Patterson said in a report that the WTI discount to Brent crude oil continued to narrow due to increased OPEC production, mild growth in US crude oil supply, and the possibility of decreased production next year. US energy services company Baker Hughes said in its closely watched report that the number of oil and natural gas rigs operated by US energy companies fell for the sixth consecutive week this week, the first time since September 2023 that the number of rigs has declined for six consecutive weeks. Data showed that as of the week ending June 6, the number of active US oil rigs fell by 9 to 442, while the number of natural gas rigs increased by 5 to 114. (Webstock Inc.) SMM Daily Review ► The market remained relatively stable at the beginning of the week, with spot prices temporarily steady [SMM EMM Daily Review] ► [SMM Hydrogen Cost Daily Review] 20250606

SMM June 9 News: Metal Market: As of the midday close, domestic market base metals showed mixed performance. SHFE copper fell 0.2%, SHFE zinc dropped 0.54%, SHFE aluminum declined 0.22%, SHFE lead rose 0.3%, SHFE tin increased 0.13%, and SHFE nickel gained 0.58%. In addition, alumina extended its losing streak from the previous two trading sessions, falling another 1.84%. Lithium carbonate dropped 0.33%, silicon metal rose 0.21%, and polysilicon fell 2.06%. The ferrous metals series mostly fell, with iron ore declining 0.35%, rebar remaining flat at 2,982 yuan/mt, HRC falling 0.1%, and stainless steel dropping 0.47%. In the coking coal and coke sector: coking coal rose 0.13%, and coke fell 0.85%. In the overseas metal market, as of 11:43, LME metals generally rose. LME zinc remained flat at $2,666/mt, LME copper rose slightly, LME aluminum increased 0.2%, LME lead gained 0.1%, LME tin rose 0.38%, and LME nickel increased 0.41%. In the precious metals sector, as of 11:43, COMEX gold fell 0.6%, and COMEX silver dropped 0.01%. Domestically, SHFE gold fell 1.59%, and SHFE silver rose 0.69%. Data released by the PBOC on Saturday showed that China's gold reserves at the end of May stood at 73.83 million ounces (approximately 2,296.37 tons), up 60,000 ounces (approximately 1.86 tons) MoM, marking the seventh consecutive month of gold reserve increases. As of the midday close, the most-traded contract for the European container shipping index fell 2.64% to 2,063.8. As of 11:43 on June 9, midday futures market movements for some contracts: 》SMM Metal Spot Prices on June 9 Spot and Fundamentals Copper: Today, spot #1 copper cathode in Guangdong was quoted at a discount of 10 yuan/mt to a premium of 120 yuan/mt against the front-month contract, with an average premium of 55 yuan/mt, up 55 yuan/mt from the previous trading day. SX-EW copper was quoted at a discount of 70 yuan/mt to a discount of 50 yuan/mt, with an average discount of 60 yuan/mt, up 50 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 78,660 yuan/mt, down 140 yuan/mt from the previous trading day, and the average price of SX-EW copper was 78,545 yuan/mt, down 145 yuan/mt from the previous trading day. Spot Market: Guangdong's inventory continued to decline after the weekend, marking the third consecutive day of decline, primarily due to reduced arrivals... 》Click for details Macro Front Domestic Aspect: [General Administration of Customs: China's Foreign Trade in Goods Grew 2.5% in the First Five Months, with Exports Up 6.3% YoY in May] The General Administration of Customs announced today (9th) that in the first five months of this year, China's total foreign trade in goods reached 17.94 trillion yuan, up 2.5% YoY, continuing the growth trend. In May, China's total imports and exports reached RMB 3.81 trillion, up 2.7% YoY. In the same month, China's exports amounted to RMB 2.28 trillion, a 6.3% YoY increase. Specifically, exports to ASEAN, the EU, Africa, and the five Central Asian countries grew by 16.9%, 13.7%, 35.3%, and 8.8% respectively. In the first five months of this year, China's exports of equipment manufacturing products reached RMB 6.22 trillion, up 9.2% YoY, accounting for 58.3% of China's total export value. Among them, exports of EVs increased by 19%, construction machinery by 10.7%, ships by 18.9%, and industrial robots by 55.4%. In the first five months, China's equipment manufacturing products contributed 73% to the overall export growth, with the contribution rate reaching as high as 76.9% in May, providing strong support for the steady growth of foreign trade. 》Click for details [National Bureau of Statistics (NBS): CPI slightly decreased in May, core CPI YoY growth expanded, PPI MoM decreased by 0.4%] In May, the Consumer Price Index (CPI) decreased by 0.2% MoM and 0.1% YoY. The core CPI, excluding food and energy prices, increased by 0.6% YoY, with the growth rate expanding by 0.1 percentage points from the previous month. The Producer Price Index (PPI) for industrial products decreased by 0.4% MoM, the same as the previous month, and decreased by 3.3% YoY, with the decline expanding by 0.6 percentage points from the previous month. China is boosting consumption with greater intensity and more targeted measures, fostering the growth of new quality productive forces, improving the supply-demand relationship in some sectors, and leading to positive changes in prices. 》Click for details The People's Bank of China (PBOC) conducted RMB 173.8 billion in 7-day reverse repo operations today, with an operating interest rate of 1.40%, unchanged from the previous session. As there were no reverse repos maturing today, a net injection of RMB 173.8 billion was achieved. ► On June 9, the central parity rate of the RMB against the US dollar in the inter-bank foreign exchange market was set at 7.1855 RMB per US dollar. US dollar: As of 11:43, the US dollar index fell by 0.18% to 99.04. The US Department of Labor announced that the US economy added 139,000 new jobs in May, exceeding analysts' expectations, while the unemployment rate remained unchanged at 4.2%. Wage growth also exceeded expectations, reducing the likelihood of an imminent interest rate cut. The market has scaled back its bets on interest rate cuts and now expects one in October. Meanwhile, US President Trump stated that he would soon announce his decision on the next Fed Chairman, saying that a "good Fed Chairman" would lower interest rates. The market expects the US Fed to keep interest rates unchanged at its June 17-18 meeting, with policymakers assessing how tariffs will affect the economy. According to the CME Group's FedWatch Tool, federal funds rate futures traders currently expect a 61% probability that the US Fed will cut interest rates by September or earlier, compared to 74% on Thursday. In other currency news: Switzerland may become the first major economy to return to negative interest rates to combat currency appreciation and falling prices, highlighting the dilemma of rapidly depleting traditional policy tools among central banks worldwide amid ongoing global trade wars. Data shows that Swiss consumer prices fell in May, prompting traders to prepare for the Swiss National Bank to lower its benchmark interest rate of 0.25% below zero, as it strives to cool the overheated Swiss franc. (Huitong Finance) Data highlights: Today, leading indicators for the turning point in the global industrial production cycle in May, the final value of the US wholesale inventory monthly rate for April, the 1-year and 3-year inflation expectations of the New York Fed for May, and other data will be released. Additionally, it is noteworthy that at the invitation of the UK government, He Lifeng, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, will visit the UK from June 8 to 13. During the visit, the first meeting of the China-US economic and trade consultation mechanism will be held with the US side. Crude oil update: As of 11:43, crude oil futures fluctuated rangebound, with US crude oil down 0.14% and Brent crude oil down 0.12%. The market awaits trade negotiations to be held later in London. Last week's better-than-expected US non-farm payrolls data and the promising outlook for trade agreements that benefit oil demand overshadowed market concerns about increased OPEC supply. After OPEC announced a significant production increase for July on May 31, HSBC said in a research report released on Friday that it expects OPEC to accelerate supply increases in August and September. HSBC forecasts that Brent crude's target price of $65 per barrel from the fourth quarter of 2025 onwards will face more downside risks. Capital Economics said in a research report that it believes OPEC's new accelerated production pace will continue. (Webstock Inc.) Spot market overview: ► Inventories continued to decline after the weekend, with suppliers actively refusing to budge on prices while selling [SMM South China Copper Spot] ► Producers' willingness to sell increased, and market trading activity picked up [SMM North China Copper Spot] ► Tianjin zinc: Overall trading was poor, and premiums continued to decline [SMM Midday Review] ► SHFE tin was boosted by ore supply tightness and macro sentiment in the short term, but the off-season demand and inventory pressure limited the rebound height [SMM Tin Midday Review] ► [SMM Iron Ore Shipping Data] Global shipments and port arrivals rebounded slightly MoM Midday reviews of other metal spot prices will be updated later. 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SMM May 8 News: Metal Market: Overnight, the domestic market's base metals nearly fell across the board, with SHFE tin down 0.94%, SHFE copper down 0.74%, SHFE nickel down 0.35%, SHFE lead up 0.57%, SHFE aluminum down 1.55%, and SHFE zinc down 0.49%. In addition, alumina fell 0.22%. Overnight, the ferrous metals series all fell, with iron ore down 1.12%, stainless steel slightly down, rebar down 0.39%, and HRC down 0.53%. For coking coal and coke: coking coal fell 2.57%, and coke fell 2.45%. Overnight, LME base metals generally fell, with LME copper down 1.38%, LME lead up 1.9%, LME aluminum down 1.92%, LME zinc down 0.74%, LME tin down 1.08%, and LME nickel down 0.43%. Overnight, precious metals: COMEX gold fell sharply by 1.47%, and COMEX silver fell 2.31%. Overnight, SHFE gold slightly rose by 0.07%, and SHFE silver fell 1.15%. As of 8:15 a.m. on May 8, overnight closing prices 》Click to view SMM Futures Data Dashboard Macro Front Domestic: 【China's Foreign Exchange Reserves Rose 1.27% MoM in April, PBOC's Gold Reserves Increased for the Sixth Consecutive Month】 According to statistics from the State Administration of Foreign Exchange (SAFE), as of the end of April 2025, China's foreign exchange reserves stood at $3,281.7 billion, up $41 billion from the end of March, representing a 1.27% increase. Official reserve asset data released by SAFE showed that China's gold reserves at the end of April were 73.77 million ounces, up 70,000 ounces MoM, marking the sixth consecutive month of gold reserve increases. 》Click to view details 【China Securities Regulatory Commission (CSRC) Issues Action Plan for Promoting High-Quality Development of Public Funds】 In line with the decision made at the Central Political Bureau meeting on September 26, 2024, to "steadily advance the reform of public funds," the CSRC recently publicly issued the Action Plan for Promoting High-Quality Development of Public Funds. The Action Plan emphasizes the Party's overall leadership over the public fund industry, highlights the political and people-oriented nature of the industry's development, adheres to an investor-centric development philosophy, and focuses on strengthening supervision, preventing risks, and promoting high-quality development as its main lines. It explores the establishment of a new development model for public funds suited to China's national and market conditions. Adhering to a problem-oriented and goal-oriented approach, the Action Plan proposes a series of reform measures in response to market and social concerns, urging industry institutions such as fund companies and fund sales agencies to shift their focus from "scale expansion" to "return enhancement," thereby forming a "turning point" for the industry's high-quality development. The Action Plan outlines 25 measures, including optimizing the fee structure for actively managed equity funds, strengthening the alignment of interests between fund companies and investors, and enhancing the industry's ability to serve investors. 》Click to view details [CPCA: Estimated nationwide wholesale sales of passenger NEVs by producers reached 1.14 million units in April, up 42% YoY] Based on comprehensive preliminary monthly data from the China Passenger Car Association (CPCA), nationwide wholesale sales of passenger NEVs by producers reached 1.14 million units in April, up 42% YoY and up 1% MoM. The cumulative wholesale sales for the period from January to April this year are estimated to reach 4 million units, up 42% YoY. US dollar: The overnight US dollar index rose by 0.64% to close at 99.88. The US Fed kept its benchmark interest rate within the range of 4.25%-4.50%, but indicated that the risks of rising inflation and unemployment have intensified. The Federal Open Market Committee (FOMC) judged that the risks of rising unemployment and inflation have increased, and the outlook for the US economy remains uncertain. After the interest rate decision, Fed Chairman Powell acknowledged that uncertainty has affected the sentiment of individuals and businesses, but the economy itself remains healthy. Additionally, he stated that an interest rate cut is possible if economic data supports it, but policy cannot be preemptively changed before the situation becomes clearer. Other currencies: The retail outlook in the Eurozone is bleak, with weak consumer willingness to spend. Eurozone consumers are likely to remain reluctant to spend this year amid trade uncertainties and slowing wage growth, as noted in a report by Ankita Amajuri of Capital Economics. Retail sales in the Eurozone fell by 0.1% in March, and consumer confidence declined due to economic uncertainties triggered by US tariff policies. Looking ahead, while lower interest rates are expected to boost consumption, the impact will be partially offset by slowing growth in real incomes. (Huitong Finance) Macro: Today, data to be released include the base rate for Hong Kong, China on May 8, the monthly rate of seasonally adjusted industrial output in Germany for March, the annual rate of industrial output in Germany for March adjusted for working days, the monthly rate of seasonally adjusted exports in Germany for March, the Bank of England's base rate for May, the number of initial jobless claims in the US for the week ending May 3, the number of continuing jobless claims in the US for the week ending April 26, the final monthly rate of wholesale inventories in the US for March, the 1-year inflation expectations of the New York Fed for the US in April, and the 3-year inflation expectations of the New York Fed for the US in April. Attention should also be paid to: the FOMC's announcement of the interest rate decision; Fed Chairman Powell's press conference on monetary policy; and the Bank of England's announcement of the interest rate decision. Crude oil: Both WTI and Brent crude oil futures fell overnight, with WTI down by 1.93% and Brent down by 1.93%. This was due to concerns about weak demand triggered by an unexpected increase in US gasoline inventories last week, as well as easing supply concerns amid hopes for a nuclear deal between Iran and the US. Data from the US Energy Information Administration (EIA) showed that US gasoline inventory unexpectedly increased last week, sparking market concerns about weak demand ahead of the US summer driving season, thereby putting pressure on the two major benchmark crude oils. In the week ending May 2, US gasoline inventory rose by 200,000 barrels to 225.7 million barrels, against market expectations of a 1.6 million barrel decline. (Webstock Inc.)

After Trump launched a full-scale trade war, something most people did not expect happened: the safe-haven status of the US dollar was shaken. Economists warned that the significant drop in the US dollar index was due to Trump triggering a major crisis, and confidence in the US was declining. For decades, US administrations from both parties have cultivated the dominant role of the US dollar in cross-border trade and its status as a safe haven, as it helps lower US borrowing costs and enables the US government to project power overseas, which is part of dollar hegemony. But if confidence in the US is damaged, these significant advantages could disappear. Barry Eichengreen, an economist at the University of California, Berkeley, said, "Global trust and reliance on the US dollar were built over half a century or more, but it could vanish in the blink of an eye." Since mid-January, the US dollar has fallen 9% against a basket of currencies, hitting a three-year low, a rare sharp decline, especially against the backdrop of global instability. Many investors, alarmed by Trump, do not believe the US dollar will quickly lose its status as the global reserve currency but are more inclined to think it will gradually weaken. However, even this slow decline is concerning enough, as it means the US will lose many advantages. Since most global commodity transactions are conducted in US dollars, even though the US has doubled its federal debt over the past decade and done many things that would typically deter investors, demand for the US dollar remains strong. This allows the US government, consumers, and businesses to borrow at exceptionally low interest rates, accelerating economic growth and improving living standards. The US government also frequently uses the dominance of the US dollar to influence other countries' economies to achieve its own goals. The international community is losing confidence in the US dollar. However, the status of the US dollar is being shaken. Deutsche Bank warned earlier this month, "The safe-haven attributes of the US dollar are being eroded." Capital Economics pointed out, "The reserve currency status and broader dominance of the US dollar are at least somewhat problematic, and this is no longer an exaggeration." Traditionally, as tariff hikes reduce demand for foreign products, the US dollar generally strengthens. But this time, the US dollar not only failed to strengthen but also fell, puzzling economists and hurting consumers. Any American traveling abroad knows that a strong US dollar can buy more. But now, the prices of French wine, Japanese and South Korean electronics, and many other imported products may rise, not only because of tariffs but also due to currency depreciation. If the US dollar loses its safe-haven status, it could hit US consumers in another way: mortgage and car loan rates would also rise, as lenders would demand higher interest to compensate for increased risks. More worryingly, the ever-expanding US federal debt could face higher interest rates. US federal debt has already reached 120% of GDP. Benn Steil, an economist at the Council on Foreign Relations, said, "Most countries with such a high debt-to-GDP ratio would trigger a major crisis, and the only reason we have escaped is that the world needs the US dollar for trade." Additionally, Trump has repeatedly threatened to undermine the independence of the US Fed, raising concerns that he will force the US Fed to cut interest rates to boost the economy, even if it risks triggering runaway inflation, which would certainly drive people away from the US dollar. Economists noted that Trump's "Liberation Day" evokes the 1956 Suez Crisis, which exposed the political incompetence of the UK, led to a loss of trust in the country, and ultimately brought down the British pound. If Trump is not careful, his so-called Liberation Day could be seen as a similar turning point.

Trump's ever-changing tariff policies are driving many economists and market participants, who seek to precisely calculate the impact of tariffs, to the brink of madness... A series of intensive tariff policy proposals, adjustments, and temporary exemptions from the White House have left many investors and economists scrambling to "tear up reports." Of course, to date, this series of revisions has not completely altered an established fact brought by Trump's trade policy proposals: US tariff rates are reverting to the past—a distant past, so far back that China was still in the Qing Dynasty... According to recent estimates from industry insiders, the effective tariff rate imposed by the Trump administration on all US imports has reached 22%-27%. The upper end of this range (27%) would push the US effective tariff rate above the level of 1903. Even at the lower end (22%), tariffs would reach their highest level since 1910. One reason for the constant changes in economists' calculations is that Trump has actually made two tariff "concessions" since last week: One was last Wednesday, the day the US bond market was in turmoil, when Trump announced a 90-day suspension of reciprocal tariffs on dozens of countries; The other was last Saturday, when US Customs and Border Protection issued a new notice, excluding a series of products from the previously announced reciprocal tariffs, including communication equipment (smartphones), computers, semiconductor equipment, and integrated circuit devices. Although Trump later insisted that "no tariff 'exceptions' were announced, they were just moved to different tariff 'categories,'" and threatened that "semiconductor tariffs" would soon arrive, temporary exemptions have indeed occurred—related "reciprocal tariffs" on these electronic products paid after April 5 can even seek refunds. According to estimates from the Yale Budget Lab, the tariff rate imposed by Trump on China (currently 145%) initially pushed the overall average effective tariff rate in the US to 27%, the highest level since 1903. However, after the temporary reciprocal tariff exemption decision on electronic products was announced, this average effective tariff rate has actually pulled back. Paul Ashworth, Chief North America Economist at Capital Economics, wrote in a report after the electronic product tariff exemption, "As a result, the overall effective tariff rate on US imports is currently 22%, still a significant increase from 2.3% a year ago, but lower than the previous day's 27%. "Specifically, although the tariff rate on China remains at 145%, once these exemptions are factored in, the actual average increase is now close to 106%." We previously mentioned that the electronic products exempted from tariffs not only include the 125% reciprocal tariff Trump imposed on Chinese goods but also the 10% baseline tariff on imports from other countries. The only part of the related goods still affected by tariffs is the 20% tariff Trump initially announced on Chinese goods. According to data compiled by Gerard DiPippo, Deputy Director of the Rand China Research Center, based on official US trade statistics for 2024, this exemption covers nearly $390 billion in US import value, with over $101 billion coming from China. DiPippo stated that overall, these exemptions include consumer electronics and semiconductors, which accounted for about 22% of US imports from China in 2024. Of course, as Trump has repeatedly emphasized in recent days, he will soon announce tariffs on semiconductors, so these numbers may still undergo further changes. US Commerce Secretary Lutnick also said last Sunday that smartphones, computers, and other electronic products, while not subject to "reciprocal tariffs," will be covered by semiconductor tariffs, which may be introduced in a month or two. In any case, Trump's "childish" and "whimsical" tariff policy changes will only bring significant uncertainty to financial markets and increase the risk of the US economy falling into recession. As Stuart Kaiser, Head of US Equity Strategy at Citibank, pointed out, the exemption for certain electronic products is "Step-1 towards progress, though still unclear." For now, "this is only a reduction or delay of tail risks, not their elimination."

Mark Zandi, chief economist at Moody's, recently warned that the impact of President Trump's tariff agenda and the resulting trade war would translate into higher consumer prices during the summer. Tariffs are essentially import taxes paid by US companies. Most economists agree that importers will pass at least part of the increased costs on to consumers. According to an analysis of the tariff policy announced on Wednesday by the Yale Budget Lab, consumers will lose $4,400 in purchasing power in the "short term." Zandi stated, "I suspect that by May—and then June and July—the inflation statistics will look quite bad." Lag in Economic Data Currently, federal inflation data has not yet shown significant effects from the tariffs. According to Zandi, it is highly ironic that the "specter" of a global trade war may have had a "positive" impact on inflation in March. He said that due to concerns about a global economic recession (and the resulting decline in oil demand), oil prices have pulled back, and this dynamic has penetrated into the decline in energy prices. Similarly, Preston Caldwell, chief US analyst at Morningstar, also said, "I think it will take some time for the inflation shock to work its way through the economic system. At first, (inflation data) may look better than it ultimately will be." Thomas Ryan, an economist at Capital Economics, also said that if the president maintains the tariff policy, consumers will begin to see significant price increases by May. "Price increases take time to filter through the entire supply chain (starting with producers, then retailers/wholesalers, and finally consumers)," Ryan wrote in an email. Capital Economics expects the Consumer Price Index (CPI) to peak at around 4% in 2025, up from 2.4% in March. This peak is about double the US Fed's long-term target. Food Prices Rise First According to Zandi, food is likely to be one of the first categories to see price increases. Since many food items are perishable, grocery stores cannot hold them for long. He said this accelerates the process of passing higher costs on to consumers. He added that, in contrast, other retailers can sell older inventory in their warehouses that is not affected by tariffs. This dynamic will delay the impact of prices on consumers. Zandi also said that by Memorial Day (the last Monday in May each year), most physical goods, such as cars, consumer electronics, clothing, and furniture, are expected to see price increases. In addition, Ryan stated that retailers and wholesalers "won’t want to do it all at once." They will gradually raise prices over time to soften the impact on consumers. But in May and beyond, consumer prices "will more fully reflect the true impact of tariffs." Caldwell, on the other hand, said that for companies, doing so would be a gamble. "Any company that takes the risk of raising prices first is likely to face political backlash and unfavorable (public sentiment) attention," he said. "I think companies will move quite slowly at first."

After COMEX gold hit a high of US$2,150.5 per ounce on March 5, it experienced a slight shock correction on the 6th; SHFE gold has frequently set new historical highs recently!