Smiles at Xi/Trump Summit in Beijing
May 14, 2026
Trump seemingly didn’t repel President Xi’s warning that the two governments would have a big problem if the U.S. interfered with Chinese policy toward Taiwan. After that, the two leaders got along well, and several business deals were announced. Trump claimed Xi’s support for the need to open up the Strait of Hormuz, but the shipping channel’s effectively closed condition stayed so this Thursday.
Overnight dollar movements were minimal. On balance, the weighted DXY dollar measure edged 0.1% higher. The Indonesian rupiah continues to hover at record lows, touching 17,556 per dollar.
All four major U.S. stock market indices rose in the first 75 minutes of trading today, with led by an 0.8% climb in the Nasdaq and with the Russell 2000’s 0.1% uptick trailing. Equities in Asia dropped 1.5% in China and 1.0% in Japan but also gained more than 1.0% in India and South Korea. Major Euroland stock markets have attracted demand, but the British FTSE underperformed on news that Health Secretary Streeting resigned presumably as a step toward challenging Prime Minister Starmer’s leadership of the ruling Labour Party.
The Middle Eastern war has been a game-changer as far as inflation expectations go. Despite what President Trump may have intended, his now-confirmed Fed Chairman appointee Kevin Warsh is expected to steer policy initially in a hawkish direction. Investors in the U.S. Treasury market are feeling reassured, and the yield on the 10-year note settled back another two basis points today. The yields on 10-year sovereign debt yields have declined even more, with overnight drops of five basis points in France and Italy and four bps in Germany, Spain and Australia. In Japan, however, the 10-year JGB yield rose four basis points.
West Texas Intermediate crude oil’s price remained steady on the north side of the key $100 per barrel threshold. Silver took a big 5% drubbing, but gold is only 0.3% lower. Bitcoin’s price appreciated 1.2%.
On the data release front, Thursday brought another U.S. price release disaster. On the heels of yesterday’s news of an unseemly 6.0% rate of producer price inflation, a 1.9% April leap in U.S. import prices lwas revealed that lifted the 12-month rate of increase to a 42-month high of 4.2%, up from 0.2% as recently as January. The imported fuel component shifted from a negative 6.0% to +16.3%, and non-fuel import price inflation edged up to 2.9% versus 1.2% back in January. A 3.3% monthly increase in U.S. export prices was meanwhile three times larger than analysts had been predicting. In other U.S. economic news, retail sales expanded last month at a comfortable rate of 0.5% on month and 4.9% on year, but bear in mind that the figures are not adjusted for inflation. New jobless insurance claims rose 12k last week but, at 211k, stayed on the low side from an historical perspective.
Several British economic indicators got reported today. The merchandise trade deficit ballooned to a record $27.22 billion in March, and its size in the whole first quarter was almost 10 billion pounds or 17% wider than a year earlier. A goods and services trade deficit was the largest monthly gap in 38 months. The Royal Institute of Chartered Surveyors monthly index of house prices deteriorated sharply further in April to a 29-month low. GDP figures brought better news, with an unexpected rise of 0.3% in March compared to February and an average 0.6% increase in the first quarter according to the initial estimate of the latter. Between the first quarters of 2025 and 2026, GDP expanded 1.0%.
Very few economies have avoided the inflationary supply shock unleashed by the war in the Middle East. Wholesale prices in India, which had been up only 1.3% year on year as recently as November, posted a 4.6% 12-month rate of increase in April, which was 1.2 percentage points more than the March reading and the largest WPI inflation rate in 43 months. Fuel costs were 24.7% greater than in April 2025.
Spanish consumer price inflation in April was left unrevised at 3.2% versus 2.3% in the January and February.
Slovakian CPI inflation accelerated to a 3-month high of 3.9% last month from 3.5% in March.
Irish consumer price inflation of 3.7% was the most in 27 months and up from 0.7% in September and October of 2024.
In China, new yuan bank loans fell CNY 10 billion last month, their first contraction in nine months, and the M2 stock of money was 8.6% greater than in April 2025.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: British GDP and trade deficit, U.S. import prices and retail sales
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