U.S. may expand Nvidia and AMD’s 15% China chips deal to other companies
Investing.com -- Louis Navellier of Navellier & Associates expects both the Bank of England and the European Central Bank (ECB) to continue to reduce their key interest rates in response to deepening recessions. This trend is expected to cause U.S. Treasury yields to decrease. Last week, the Bank of England followed the ECB’s lead and reduced its key interest rate by 0.25% to 4.5%. Additionally, it revised its GDP growth forecast downwards. This marks the third time the Bank of England has cut rates since August.
The UK is believed to be heading towards a recession due to recent tax increases and a ban on crude oil drilling in Scotland by Keir Starmer. This ban is causing energy prices to rise in a country where households often require subsidies to afford their electric bills.
In other news, President Trump has confirmed that tariffs on the European Union (EU) are imminent due to a significant trade deficit. In response, Commission President Ursula von der Leyen stated that the EU would respond firmly if targeted unfairly. To help alleviate tariff tensions, the EU is considering increasing its imports of U.S. LNG.
Andrew Baily, Governor of the Bank of England, stated that tariffs that disrupt the global economy could potentially weaken growth, but their impact on inflation is uncertain. President Trump has stated that while trade with Britain is currently unbalanced, it can be rectified. This suggests that Britain may not be as severely impacted by U.S. tariffs as the EU.
President Trump has also proposed that the U.S. should take over Gaza and transform it into the "Riviera of the Middle East." Despite possible international criticism, this proposal is seen as part of President Trump’s strategy to assert U.S. economic dominance.
In the U.S., the manufacturing recession has come to an end. The Institute of Supply Management (ISM) reported that its manufacturing index rose to 50.9 in January, up from 49.2 in December, indicating an expansion. The production component also increased to 52.5 in January, up from 49.9 in December, a positive sign for first-quarter GDP estimates.
The ADP report has raised expectations for a strong January payroll report, announcing that 183,000 private payroll jobs were created in January. However, the manufacturing sector lost 13,000 jobs in the same month. Despite this, the labor market remains robust and is expected to counterbalance the ongoing layoffs at federal government agencies.
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