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Markets Stabilise as Policy Risks Recede

Financial markets are overcoming post-traumatic stress syndrome three days after Donald Trump started—and then temporarily paused—a potentially-catastrophic trade war with Canada and Mexico. Benchmark ten-year Treasury yields are inching lower and major equity bourses are headed for a stronger open after Treasury Secretary Scott Bessent called tariffs a “means to an end,” and said the new administration is focused on bringing down interest rates. The dollar is holding firm against its rivals. The number of Americans submitting initial applications for unemployment benefits rose incrementally to 219,000 in the week ended February 1, and continuing claims fell slightly in the prior...

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Regularly-Scheduled Programming Resumes

A sense of normalcy is returning to financial markets this morning after Donald Trump backed off threats against Canada and Mexico, granting the countries a 30-day reprieve from his proposed 25-percent tariffs. The dollar is retreating amid sluggish price action in currency markets, ten-year yields are down as inflation expectations recede, and equity markets are setting up for a soft open. Measures of implied volatility are coming off their highs, but remain elevated relative to recent history. The stay of execution was achieved after leaders in each country agreed to bolster border security in telephone calls with Trump. Bafflingly, the...

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Trade Shock Roils Global Markets

The dollar is climbing, yields are rising and equity markets are setting up for sharp losses at the open after US President Donald Trump fired the opening salvo in what could quickly devolve into a global trade war. The administration said Saturday it will levy 25 percent import taxes on goods from Canada and Mexico—with Canadian “energy resources” subjected to a lower 10 percent levy—along with an extra 10 percent tariff on imports from China. If implemented immediately and sustained, this would represent the biggest increase in duties since the Smoot-Hawley Tariff Act of 1930—often blamed for deepening the Great...

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Canada and Mexico Launch Retaliatory Measures Against US

In a response that could add momentum to an escalatory cycle, Prime Minister Justin Trudeau this evening said “Canada will be responding to the US trade action with 25 percent tariffs on $155 billion dollars worth of American goods,” including immediate tariffs on $30 billion as of Tuesday, and another $125 billion in 21 days* to allow Canadian companies to seek alternatives”. “This is a threat against our whole country,” he said, and “as part of our response, we are considering, with the provinces and territories, several non-tariff measures including some related to critical minerals, energy procurement, and other partnerships”....

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Trump Imposes Sweeping Tariffs on Canada and Mexico, Threatening to Ignite Global Trade War

Ending—and beginning—weeks of speculation, President Donald Trump has delivered details of his tariff plan to officials in Ottawa and Mexico City, raising taxes on most imports from Canada and Mexico to 25 percent, in a move that is likely to generate upheaval in the world’s largest integrated trading area and trigger another round of disruption in foreign exchange markets. According to major Canadian news networks*, the president intends to authorise the implementation, as of Tuesday, of 25-percent tariffs on virtually all goods imports, alongside a 10 percent levy on Canadian oil and gas products. If deployed immediately, the increase would...

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