Markets are braced for Donald Trump’s July 9 deadline for tariff deals. The RBA is expected to cut 25 basis points tomorrow, but the RBNZ is expected to hold on Wednesday. And Vietnam’s two-tiered trade deal is not expected to hit exports much.
In our deep dive interview, ANZ Economist Bansi Madhavani looks more closely at what sort of deals could be done this week, and what they might mean for the US economy.
5 things to know in 5 minutes:
Donald Trump signed his Big Beautiful Budget Bill into law on Friday, Bansi says it locks in enormous borrowing that will keep upwards pressure on bond yields.
ANZ Group Chief Economist Richard Yetsenga explains why the Reserve Bank of Australia is expected to cut its cash rate 25 basis points to 3.6% tomorrow, while the Reserve Bank of New Zealand is now likely to hold on Wednesday at 3.25%.
ANZ’s Head of FX Research Mahjabeen Zaman says ANZ Research’s expectation in the longer term is for the RBNZ to cut three more times to 2.5%, while the RBA cuts twice more to 3.35%, which will help keep the Aussie dollar a bit stronger versus the Kiwi in the longer run.
Vietnam did a trade deal with the United States last week that ANZ’s Head of Asia Research Khoon Goh says sets an important precedent. The two-tiered deal will see Vietnam’s exports directly to the United States tariffed at 20%, while any transshipments, especially from China, will be tariffed at 40%.
Khoon says Vietnam has been clamping down on the transshipments, so the 40% tariff may not be so painful. He says the key thing is the direct export tariff of 20% compares with 10% for everyone else, which means the deal may not hurt Vietnam’s exports that much.
Cheers,
Bernard.
PS: Catch you tomorrow with a closer look at how China may use stablecoins to help de-dollarise.
