The Overnight News Roundup - May 12

May 12, 2025

PiQ and Zack Eiseman provide you with a consolidated roundup of the overnight news that matters most to markets.

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TRADE:

Risk on after officials from the U.S. and China concluded the weekend’s high-stakes trade talks, with Washington touting progress toward a deal and Beijing saying that both sides agreed to begin a formal negotiation process. Both sides announced they are to release a joint statement on Monday. (WSJ)
China's Vice Premier He Lifeng, speaking to reporters after trade talks, said the talks had been candid, in-depth and constructive with both sides reaching an important consensus. Said the talks were an important first step. When asked about the joint statement, said it will be "good news for the world". (RTRS)
Chinese-affiliated media in Asia suggest "The tariff reductions agreed upon by both China and the U.S. will exceed 100%, source says". (PhoenixTVHK via Newsquawk)
China viewed the weekend talks less as an opportunity to reset bilateral relations than as a chance to gauge whether the Trump administration intends to de-escalate current trade tensions, according to people who consult with senior Chinese officials cited by the WSJ. One of the people said Beijing wants to keep talking to bring down the tariff levels. (WSJ)
Trump on Saturday, in a Truth post, hailed the talks with China, saying the two sides had negotiated "a total reset ... in a friendly, but constructive, manner... Many things discussed, much agreed to". Trump added, "We want to see, for the good of both China and the U.S., an opening up of China to American business. GREAT PROGRESS MADE!!!", without elaborating. (Truth)
Citi's economists believe it is probable US tariffs on Chinese imports could be reduced to around 45% as talks move to the potentially more challenging phase of the conversation. Citi believes the weekend's talks could lead to a "Phase 1.5" trade deal that addresses the easier aspects of negotiations. (MktNews)
US President Trump said in a Truth post that he would sign an executive order that he said would reduce prescription drug and pharmaceutical prices by between 30% and 80%. "I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World," Trump added. (Truth)
Japan won’t accept any initial trade agreement with the US that excludes an accord on autos, according to Prime Minister Shigeru Ishiba. Ishiba on Monday signalled that increasing corn imports from the U.S. would be among options in trade negotiations with Washington. (BBG/RTRS)
Chinese companies are accelerating a purge of foreign components from their supply chains, as trade tensions with the US threaten to hasten the decoupling between the world’s two largest economies. (FT)
Colombia faces possible US trade retaliation after its President Gustavo Petro said he planned to sign up to Beijing’s Belt and Road infrastructure initiative during a visit to China for a regional meeting next week. (FT)

MACRO:

Fed's Cook (voter) said Trump's unfolding trade policy may curb U.S. productivity and possibly require higher interest rates to contain inflation in a less efficient economy. (RTRS)
Fed's Musalem (voter) said the Fed should not commit to further rate cuts until it is clear whether the Trump administration's tariff policies lead to persistent inflation or a less serious, one-time adjustment in prices, something he sees as a coin toss right now. (RTRS)
Fed's Hammack (non-voter) said the Fed needs more time to see how the economy responds to Trump's tariff and other policies before figuring out the right response. (RTRS)
Wall Street banks say they are seeing signs that investors managing trillions of dollars of assets are starting to trim their US positions, on concerns over erratic policymaking, President Donald Trump’s attacks on the Federal Reserve chair and the fallout from the trade war. (FT)
The CBO Director warned in the FT that the Wall Street ructions sparked by Trump’s trade war could be a “tipping point” for foreign investors’ willingness to hold US assets. (FT)
US House Republicans plan to help pay for an extension of President Donald Trump’s massive tax cuts by clawing back unused funds from scores of programs and grants in his predecessor’s signature climate law. (BBG)
House Republicans are releasing a plan to cut Medicaid spending, including work requirements and eligibility checks. Party leaders want to pass the measure in the House by Memorial Day, along with the rest of Trump’s “big, beautiful” tax and spending bill. (WSJ)
President Trump’s administration is in talks with the Qatari government about accepting a luxury Qatari plane for his use as president and potentially beyond, according to WSJ sources. (WSJ)
Former US military leaders are lobbying Congress to reject a Republican push to repeal billions of dollars in tax credits for critical minerals, warning it would leave the country vulnerable to China. (FT)
China's factory-gate prices posted the steepest drop in six months in April while consumer prices fell for a third month. (RTRS)
Hedge funds, especially U.S.-based ones, added bullish bets on Chinese stocks last week on hopes of progress in U.S.-China trade talks, according to Morgan Stanley. (RTRS)
China's car sales in April rose for a third month, up 14.8% from a year earlier, as government-subsidised auto trade-ins mitigated the impact of U.S. tariffs on consumer sentiment. (RTRS)
China's President Xi Jinping will attend the opening of and deliver a speech at the China-CELAC Forum in Beijing on May 13, China's Foreign Ministry announced on Sunday. (RTRS)
Goldman Sachs Group Inc. lifted its yuan forecast to 7 per dollar over the next 12 months as US-China trade negotiations get underway. (BBG)
Chinese copper concentrate imports climbed to nearly 3 million tons last month, a record that’s likely to ease price pressures in the domestic market and offer relief to smelters fighting over the availability of feedstock. (BBG)
Japanese PM Ishiba said on Monday the government was ready to take further steps to cushion the economic blow from higher U.S. tariffs, but signalled caution on cutting the country's consumption tax rate. (RTRS)
Japan's service-sector sentiment worsened in April on concern over the impact of higher U.S. tariffs, a government survey showed on Monday. (RTRS)
Japan’s 30-year government bond yield climbed to its highest level in almost 25 years as optimism from US-China trade talks encouraged selling of haven assets. (BBG)
Japan’s bank deposits increased at the slowest pace since April 2007 as households seek to safeguard their assets from inflation. (BBG)
Proxies to Japanese pension funds bought a record amount of foreign equities in April, when Trump’s reciprocal tariffs rocked global markets, according to preliminary data from Japan’s Ministry of Finance on Monday. (BBG)
ECB’s Schnabel said higher prices from tariffs could limit rate cuts. (FT)
Bloomberg survey shows the ECB will lower borrowing costs more than previously expected this year to below 2% as inflation is seen undershooting the institution’s target in early 2026. (BBG)
UK Chancellor Reeves is preparing to launch a review of the Isa market within weeks in a push to encourage savers to channel more money from tax-free cash into British stocks, according to FT sources. (FT)
The number of UK entrepreneurs voluntarily shutting down viable businesses has hit the highest rate since the pandemic, with advisers blaming rises to tax rates for the jump in liquidations. (FT)
Bloomberg survey sees the SNB likely cutting its interest rate to zero in June after less than three years in positive territory. (BBG)
Australia’s Prime Minister Anthony Albanese retained Treasurer Jim Chalmers and Foreign Minister Penny Wong in their portfolios as he unveiled changes to his lineup just over a week after decisively winning an election. (BBG)
Optimism among Swedes over the direction of home prices is waning as the Nordic country continues to grapple with economic headwinds and the prospect of slowing growth. (BBG)
Traders have rebranded more than $1 billion of Venezuelan oil shipments to China as Brazilian crude over the past year, according to two tanker tracking firms, company documents and four traders cited by Reuters, helping buyers to cut logistics costs and circumvent U.S. sanctions. (RTRS)
Wheat futures fell to their lowest since July 2024 as harvests draw closer in the Northern Hemisphere, with rains benefiting crops in some key growers. (BBG)

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GEOPOLITICAL:

The U.S. said it was encouraged by talks with Iran on Sunday after a meeting in Oman, but the two sides remain divided on key questions, including whether Tehran will be allowed to enrich its own uranium. (WSJ)
Russian President Vladimir Putin on Sunday proposed direct talks with Ukraine on May 15 in Istanbul. (RTRS)
Ukrainian President Zelenskiy said he would agree to meet Putin in Turkey on Thursday after Trump told him immediately to accept Putin's proposal of direct talks. (RTRS)
UK Foreign Secretary David Lammy is set to unveil fresh sanctions targeting Russia as Britain hosts a security meeting of European ministers for the first time. (BBG)
The military operations chiefs of India and Pakistan are set to discuss on Monday the next steps for the nuclear-armed neighbours, India said, as a ceasefire returned calm to the border. (RTRS)
Hamas said on Sunday that it would release the last American hostage held in Gaza after discussions with the U.S. over a cease-fire and a deal to allow humanitarian aid to enter the strip. (WSJ)

EQUITIES:

Nvidia has raised GPU prices across the board to offset the loss of H20 chip sales to China and pay for soaring costs at TSMC Arizona, DigiTimes reports, with prices of AI servers with Nvidia H200 or B200 GPUs and modules inside up 10%-15% already.
OpenAI and Microsoft are rewriting terms of their multibillion-dollar partnership in a negotiation designed to allow the ChatGPT maker to launch a future IPO, while protecting the software giant's access to cutting-edge AI models. (FT)
TSMC Arizona production yields have been so good that US clients have already fully booked capacity of the three newly announced fabs set for the area, despite no set construction schedule.
China’s Zijin Mining Group Co. has picked Citic Securities Co. and Morgan Stanley for the Hong Kong IPO of its overseas gold business as it seeks to take advantage of record bullion prices, according to Bloomberg sources. (BBG)
Chinese battery manufacturer CATL aims to raise at least HK$31.01 billion ($3.99 billion) in its Hong Kong listing, according to its prospectus filed on Monday, the largest listing globally so far in 2025. (RTRS)
Sharp to sell once-shining LCD panel factory in Japan to Foxconn. (Nikkei)
UniCredit SpA posted first-quarter profit that topped analyst expectations, strengthening Chief Executive Officer Andrea Orcel’s hand as he pursues potential acquisitions. (BBG)
Saudi Aramco reported a marginal profit beat for the first quarter as weaker oil prices caused by global economic uncertainty dragged on earnings. (WSJ)