Related Insights
- ECB meeting could be EUR-positive 04 Jun 2025
- Interest Rates Analytics, HKD rates: Plunging HIBORs 03 Jun 2025
- USD Rates: Labour market watch 03 Jun 2025
Foreign investors increasingly find that America, under US President Donald Trump’s second-term agenda, is becoming less hospitable for foreigners to profit – whether through trade or the capital markets.
On May 28, the US Court of International Trade ruled that Trump overstepped his authority under the International Emergency Economic Powers Act (IEEPA) without congressional approval to impose his sweeping “Liberation Day” tariffs. A day later, the US Courts of Appeal for the Federal Circuit issued a temporary stay on the trade court’s ruling, allowing his tariffs to remain in effect, to review the plaintiffs’ responses by June 5, and that for the Trump administration by June 9. If the appeals court backs the trade court’s ruling, the administration will likely cascade the case to the Supreme Court.
The timing of the trade court’s ruling against Trump’s sweeping tariffs could not be worse, landing just as US Treasury Secretary Scott Bessent is trying to push through Trump’s “One Big Beautiful Bill” by Independence Day. Apart from undercutting tariffs as a significant government revenue source, the trade court’s ruling, if upheld, would cast legal doubts on Trump’s authority to bypass Congress just as negotiations over the federal debt ceiling start to intensify. Bessent told US lawmakers that the US could reach its X-date as early as August. Fiscal hawks in the US Senate have significantly resisted the OBBB following the House’s tight 215-214 vote on May 22, less than a week after Moody’s axed America’s final triple-A sovereign debt rating. Since early April, the divergence between the DXY Index and the US Treasury 30Y yield remains a concern for bond vigilantes.
The trade court’s ruling appeared to have pivoted Trump toward improvisational Plan B solutions such as doubling steel and aluminium tariffs to 50%; blaming China for the breakdown in trade talks; and reviving a capital gains tax on foreign holdings of US assets. In tandem with rising tariffs and legal overreach, the capital tax proposal would reinforce the perception that Trump’s America is no longer open to foreign participation on equal terms.
Against this background, the focus at the European Central Bank meeting on June 5 could be less about the 25bps cut in the deposit facility rate to 2% that the markets have fully discounted. Instead, ECB President Christine Lagarde could seize the moment to position the EUR as a safe, stable, and rule-based alternative global currency that would not default on its institutions. With the Bank of Japan also dealing with its bond market volatility, the Swiss National Bank will find it difficult to counter the CHF’s haven currency appeal, risking domestic backlash if it resorts to negative rates, and America’s criticism if it intervenes.
Quote of the Day
“Concentrate all your thoughts upon the work at hand. The sun’s rays do not burn until brought to a focus.”
Alexander Graham Bell
June 2 in history
In 1875, Alexander Graham Bell and his assistant Thomas Watson made their first sound transmission, a significant step in the development of the telephone.
Topic
GENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.
Related Insights
- ECB meeting could be EUR-positive 04 Jun 2025
- Interest Rates Analytics, HKD rates: Plunging HIBORs 03 Jun 2025
- USD Rates: Labour market watch 03 Jun 2025
Related Insights
- ECB meeting could be EUR-positive 04 Jun 2025
- Interest Rates Analytics, HKD rates: Plunging HIBORs 03 Jun 2025
- USD Rates: Labour market watch 03 Jun 2025