Switzerland has officially re-entered an era of zero interest rates, following a 0.25% cut by the Swiss National Bank (SNB) on 19th June 2025.
The move, though widely expected, marks a significant shift in monetary policy as the nation grapples not with inflation – but deflation.
Consumer prices in May dipped 0.1% year-on-year, driven largely by the enduring strength of the Swiss franc.
The SNB cited diminished inflationary pressure as the rationale behind the cut and indicated it remains focused on long-term price stability.
Chairman Martin Schlegel emphasised that short-term negative inflation readings weren’t the primary motivator. Instead, the Bank revised its inflation forecast down to 0.2% for 2025 and 0.5% for 2026.
Switzerland’s strong currency continues to weigh heavily on imported goods prices – an especially potent factor in a small, open economy.
Analysts suggest the SNB may go lower if inflation fails to rise, sparking speculation about a return to negative rates.
This development sets Switzerland apart from other major economies still battling inflation, underscoring the unique challenge of managing deflation in a world accustomed to rate hikes.
The next SNB policy decision is due in September 2025. Until then, all eyes remain on the franc – and the fallout.
U.S. Federal Reserve has kept its benchmark interest rate steady at 4.25% to 4.50% for the fourth consecutive meeting.
This decision reflects a cautious stance amid ongoing uncertainty surrounding President Trump’s tariff policies and their potential impact on inflation and economic growth.
The Fed still anticipates two rate cuts later in 2025, but officials are split – some expect none or just one cut.
Inflation projections have been revised upward to 3.0% for 2025, while economic growth expectations have been trimmed to 1.4%.
U.S. President Donald Trump has been sharply critical of Federal Reserve Chair Jerome Powell, especially following the Fed’s decision on June 18, 2025, to keep interest rates steady.
He’s called Powell ‘a stupid person’, ‘destructive’, and ‘Too Late Powell’. accusing him of being politically motivated and slow to act on rate cuts.
And the Federal Reserve is supposed to act independently of political influence.
AMD has officially lifted the curtain on its next-generation AI chip, the Instinct MI400, marking a significant escalation in the battle for data centre dominance.
Set to launch in 2026, the MI400 is designed to power hyperscale AI workloads with unprecedented efficiency and performance.
Sam Altman and OpenAI have played a surprisingly hands-on role in AMD’s development of the Instinct MI400 series.
Altman appeared on stage with AMD CEO Lisa Su at the company’s ‘Advancing AI’ event, where he revealed that OpenAI had provided direct feedback during the chip’s design process.
Altman described his initial reaction to the MI400 specs as ‘totally crazy’ but expressed excitement at how close AMD has come to delivering on its ambitious goals.
He praised the MI400’s architecture – particularly its memory design – as being well-suited for both inference and training tasks.
OpenAI has already been using AMD’s MI300X chips for some workloads and is expected to adopt the MI400 series when it launches in 2026.
This collaboration is part of a broader trend: OpenAI, traditionally reliant on Nvidia GPUs via Microsoft Azure, is now diversifying its compute stack.
AMD’s open standards and cost-effective performance are clearly appealing, especially as OpenAI also explores its own chip development efforts with Broadcom.
AMD’s one-year chart snap-shot
One-year AMD chart snap-shot
So, while OpenAI isn’t ditching Nvidia entirely, its involvement with AMD signals a strategic shift—and a vote of confidence in AMD’s growing role in the AI hardware ecosystem.
At the heart of AMD’s strategy is the Helios rack-scale system, a unified architecture that allows thousands of MI400 chips to function as a single, massive compute engine.
This approach is tailored for the growing demands of large language models and generative AI, where inference speed and energy efficiency are paramount.
AMD technical power
The MI400 boasts a staggering 432GB of next-generation HBM4 memory and a bandwidth of 19.6TB/sec—more than double that of its predecessor.
With up to four Accelerated Compute Dies (XCDs) and enhanced interconnects, the chip delivers 40 PFLOPs of FP4 performance, positioning it as a formidable rival to Nvidia’s Rubin R100 GPU.
AMD’s open-source networking technology, UALink, replaces Nvidia’s proprietary NVLink, reinforcing the company’s commitment to open standards. This, combined with aggressive pricing and lower power consumption, gives AMD a compelling value proposition.
The company claims its chips can deliver 40% more AI tokens per dollar than Nvidia’s offerings.
Big tech follows AMD
OpenAI, Meta, Microsoft, and Oracle are among the major players already integrating AMD’s Instinct chips into their infrastructure. OpenAI CEO Sam Altman, speaking at the launch event reportedly praised the MI400’s capabilities, calling it ‘an amazing thing‘.
With the AI chip market projected to exceed $500 billion by 2028, AMD’s MI400 is more than just a product—it’s a statement of intent. As the race for AI supremacy intensifies, AMD is betting big on performance, openness, and affordability to carve out a larger share of the future.
It certainly looks like AMD is positioning the Instinct MI400 as a serious contender in the AI accelerator space – and Nvidia will be watching closely.
The MI400 doesn’t just aim to catch up; it’s designed to challenge Nvidia head-on with bold architectural shifts and aggressive performance-per-dollar metrics.
Nvidia has long held the upper hand with its CUDA software ecosystem and dominant market share, especially with the popularity of its H100 and the upcoming Rubin GPU. But AMD is playing the long game.
Nvidia 0ne-year chart snapshot
Nvidia 0ne-year chart snapshot
By offering open standards like UALink and boasting impressive specs like 432GB of HBM4 memory and 40 PFLOPs of FP4 performance, the MI400 is pushing into territory that was once Nvidia’s alone.
Whether it truly rivals Nvidia will depend on a few key factors: industry adoption, software compatibility, real-world performance under AI workloads, and AMD’s ability to scale production and support.
But with major players like OpenAI, Microsoft, and Meta already lining up to adopt the MI400.
As the world transitions toward cleaner technologies and digital connectivity, rare earth elements (REEs) have emerged as vital components in everything from electric vehicles and wind turbines to smartphones and defence systems and of course AI.
Currently, China dominates the global supply chain, accounting for over 60% of global rare earth production and an even greater share of refining capacity.
But India, rich in untapped reserves and increasingly assertive in its industrial strategy, is positioning itself to become a major player in this crucial sector.
India possesses the world’s fifth-largest reserves of rare earths, largely located in coastal monazite sands.
For decades, however, its output has remained modest, constrained by limited infrastructure, outdated regulations, and a lack of downstream processing capabilities. That is changing.
In recent years, the Indian government has taken clear steps to ramp up domestic production and attract investment.
One significant move was allowing private and foreign players into the exploration and processing of REEs -previously controlled by a single government-run firm.
Coupled with India’s broader push to diversify supply chains away from China, this signals a shift in ambition.
India is also pursuing strategic partnerships. Collaborations with countries such as Australia and Japan – both of which have rare earth expertise and a shared desire to counterbalance Chinese dominance – are paving the way for technology transfers and joint ventures.
Moreover, India’s participation in the Quad (with the U.S., Australia, and Japan) adds a geopolitical dimension to these efforts.
Challenges remain. India still lacks the sophisticated separation and refining technologies that make rare earths commercially viable. Environmental concerns around mining also demand a careful, sustainable approach.
Rare Earth Elements table – top 10 producers
Total global reserves are estimated at approximately 131 million metric tons. See worlpopulationreview.
Yet, with incentives under the Production-Linked Incentive (PLI) schemes, and growing demand for localised electronics and green tech manufacturing, momentum is building.
So, is India likely to become a major competitor? Not overnight. But ‘possible’ is rapidly morphing into ‘plausible.’ As the global rare earths map continues to shift—fueled by geopolitics, technological change, and strategic realignment – India is no longer on the sidelines.
Whether it becomes a global leader or a key alternative supplier, its role is poised to expand.
The world should watch closely—not just for the metals it may mine, but for the strategic leverage they may bring.
And we have Greenland and Ukraine reserves yet to be discovered?
The UK economy contracted by 0.3% in April 2025, a sharper decline than the 0.1% forecast by economists, according to the Office for National Statistics (ONS).
The unexpected downturn has raised fresh concerns about the country’s economic resilience amid rising costs and global trade tensions.
April’s contraction was driven by a combination of domestic and international pressures. A significant rise in employers’ National Insurance contributions, coupled with increases in water, energy, and council tax bills, placed added pressure on businesses and households.
Simultaneously, newly imposed U.S. tariffs, introduced by President Trump, led to the steepest monthly drop in UK exports to the United States on record.
Services and manufacturing, which together form the backbone of the UK economy, both saw declines.
Legal and real estate sectors were particularly affected, following a surge in house sales in March 2025 ahead of stamp duty changes. Car manufacturing also faltered after a strong first quarter.
Despite the monthly setback, UK GDP still grew by 0.7% over the three months to April 2025, suggesting some economic activity may have been pulled forward earlier in the year.
Chancellor Rachel Reeves reportedly acknowledged the figures were ‘clearly disappointing’ but reaffirmed her commitment to long-term growth through strategic investments in infrastructure, housing, and energy.
While April’s figures may not signal an immediate crisis, they underscore the fragility of the UK’s recovery.
With UK inflation still above target and interest rates elevated, the UK government faces a delicate balancing act to sustain momentum without stifling growth.
In May 2025, U.S. inflation rose by 0.1% from the previous month, bringing the annual inflation rate to 2.4%, slightly below economists’ predictions of 2.5%.
Core U.S. inflation, which excludes food and energy, increased by 0.1% month-on-month, with a year-on-year rate of 2.8%.
The modest rise was largely offset by falling energy prices, particularly a 2.6% drop in petrol, which helped keep overall inflation in check.
Prices for new and used vehicles, as well as apparel, also declined. Meanwhile, food and housing (shelter) costs each rose by 0.3%, with housing (shelter) being the primary contributor to the monthly increase.
Despite President Trump’s sweeping tariffs introduced in April 2025, their inflationary impact has yet to fully materialise. Analysts suggest that many companies are still working through pre-tariff inventories, delaying price hikes for consumers.
However, economists caution that the effects may become more pronounced in the coming months.
The Federal Reserve is expected to hold interest rates steady for now, as U.S. policymakers monitor whether inflation remains contained or begins to accelerate due to trade-related pressures.
Markets responded positively to the data, with stock futures rising and Treasury yields falling.
So, while inflation remains above the Fed’s 2% target, May’s figures suggest a temporary reprieve.
The global financial landscape is undergoing a significant transformation as Asian economies accelerate their move away from the U.S. dollar.
This trend, known as de-dollarisation, is driven by a combination of geopolitical uncertainties, monetary policy shifts, and efforts to reduce reliance on the greenback in trade and investment.
The forces behind de-dollarisation
For decades, the U.S. dollar has dominated global trade and foreign exchange reserves. However, its share in global reserves has steadily declined from over 70% in 2000 to 57.8% in 2024.
This shift is particularly pronounced in Asia, where nations are actively promoting the use of local currencies to mitigate exchange rate risks and strengthen regional financial stability.
The Association of Southeast Asian Nations (ASEAN) has committed to increasing local currency settlements in trade and investment as part of its Economic Community Strategic Plan for 2026-2030.
Additionally, major economies like China and India are developing alternative payment systems to bypass traditional dollar-based transactions, further reducing dependency on the greenback.
Implications for the U.S. Dollar
The dollar has faced increased volatility, with a sharp 8% decline in the dollar index since the start of 2025. Investors and policymakers are recognising that the dollar can be leveraged in trade negotiations, prompting a reassessment of portfolios overweight in U.S. assets.
While the dollar remains the world’s primary reserve currency, its dominance is being challenged. Asian economies, particularly Singapore, South Korea, Taiwan, and China, hold substantial foreign assets, giving them the ability to repatriate earnings into local currencies.
The shift away from the dollar is a slow but steady process, signalling a broader transition towards a multipolar financial system.
Crypto and DeFi are playing a growing role in de-dollarisation.
Many nations, particularly within BRICS, are turning to digital assets to reduce reliance on the U.S. dollar in global trade.
How crypto supports de-dollarisation
Alternative Payment Systems – Cryptocurrencies like Bitcoin and Ethereum allow countries under U.S. sanctions to bypass traditional dollar-based financial systems.
Central Bank Digital Currencies (CBDCs) – Over 130 countries are exploring CBDCs to strengthen local currency transactions and reduce dependence on the dollar.
Stablecoins & Cross-Border Trade – Stablecoins such as USDT and USDC facilitate international payments, with daily transaction volumes exceeding $150 billion.
The bigger picture
The shift away from the dollar is not just about crypto – it’s part of a broader movement toward a multipolar financial system.
While digital assets provide alternatives, traditional financial institutions are also adapting by promoting local currency settlements
At London Tech Week, Nvidia CEO Jensen Huang made a striking statement: “The way you program an AI is like the way you program a person.” (Do we really program people or do we teach)?
This marks a fundamental shift in how we interact with artificialintelligence, moving away from traditional coding languages and towards natural human communication.
Historically, programming required specialised knowledge of languages like C++ or Python. Developers had to meticulously craft instructions for computers to follow.
Huang argues that AI has now evolved to understand and respond to human language, making programming more intuitive and accessible.
This transformation is largely driven by advancements in conversational AI models, such as ChatGPT, Gemini, and Copilot.
These systems allow users to issue commands in plain English – whether asking an AI to generate images, write a poem, or even create software code. Instead of writing complex algorithms, users can simply ask nicely, much like instructing a colleague or student.
Huang’s analogy extends beyond convenience. Just as people learn through feedback and iteration, AI models refine their responses based on user input.
If an AI-generated poem isn’t quite right, users can prompt it to improve, and it will think and adjust accordingly.
This iterative process mirrors human learning, where guidance and refinement lead to better outcomes.
The implications of this shift are profound. AI is no longer just a tool for experts – it is a great equalizer, enabling anyone to harness computing power without technical expertise.
As businesses integrate AI into their workflows, employees will need to adapt, treating AI as a collaborative partner rather than a mere machine.
This evolution in AI programming is not just about efficiency; it represents a new era where technology aligns more closely with human thought and interaction.
China’s economic landscape is facing mounting challenges as exports to the United States plummet and consumer prices decline, sparking fears of deflation.
The latest trade data reveals that Chinese exports to the U.S. fell by 34.5% in May2025, marking the sharpest drop in over five years. This decline comes despite a temporary trade truce that paused most tariffs for 90 days.
China’s consumer prices have continued their downward trend, raising concerns about deflation and its long-term impact on the economy.
The sharp fall in exports is largely attributed to high U.S. tariffs and weakening demand. While China’s overall exports grew by 4.8%, shipments to the U.S. suffered significantly, reflecting the ongoing trade tensions between the two economic giants.
Imports from the U.S. also dropped by 18%, further shrinking China’s trade surplus with America. In response, Chinese exporters are shifting their focus to other markets, particularly Southeast Asia and Europe, where demand remains relatively strong.
China’s CPI reading
At the same time, China’s consumer price index (CPI) fell by 0.1% in May 2025, deepening concerns about deflation. Deflation, the opposite of inflation, can lead to lower corporate profits, wage cuts, and job losses, creating a vicious cycle of economic stagnation.
The decline in consumer prices is largely driven by weak domestic demand, exacerbated by the ongoing real estate crisis. Many Chinese consumers are hesitant to spend, fearing further declines in property values and economic uncertainty.
China’s rare earth materials olive branch
China appears to have offered U.S. and European auto manufacturers a reprieve after industry groups warned of increasing production threats over a rare earth shortage.
China’s Ministry of Commerce on Saturday 7th June 2025 reportedly said it was willing to establish a so-called ‘green channel’ for eligible export licence applications to expedite the approval process to European Union firms.
Trump calls it his ‘Big Beautiful Bill’, but Musk calls it a ‘Disgusting Abomination’ – who’s right?
Trump’s Big Beautiful Bill is a sweeping tax and spending package aimed at making his 2017 tax cuts permanent while introducing new tax breaks and budget reforms.
It eliminates taxes on tips and overtime, raises the State and Local Tax (SALT) deduction cap, and creates government-funded savings accounts for newborns.
The bill also imposes stricter Medicaid work requirements, cuts funding for green energy incentives, and repeals taxes on gun silencers and indoor tanning.
Critics, including Elon Musk, argue it will increase the budget deficit by $2.5 trillion, burdening future generations with unsustainable U.S. debt.
Musk’s opposition to the Bill
Elon Musk has fiercely opposed Trump’s Big Beautiful Bill, calling it a “disgusting abomination”.
His main concerns include:
Massive Spending & Deficit Growth: Musk argues the bill adds $2.5 trillion to the federal deficit, saddling future generations with unsustainable debt.
Pork-Filled Legislation: He claims the bill is packed with wasteful spending that benefits political allies rather than the American people.
Cuts to EV & Solar Incentives: The bill removes tax credits for electric vehicles and solar energy, which directly impacts Tesla and Musk’s clean energy initiatives.
Unfair Favouritism: Musk believes the bill protects oil & gas subsidies while cutting incentives for renewable energy.
Lack of Transparency: He insists the bill was rushed through Congress without proper review, saying even lawmakers barely had time to read it.
Trump, on the other hand, has dismissed Musk’s criticism, saying he’s “very disappointed” and believes Musk is upset mainly because of the EV tax credit removal.
The feud continues to escalate, with Musk urging lawmakers to “kill the bill.”
It’s a worry – arguably the most powerful man in the world and the richest man in the world in a highly visible fallout.
Unrest and distrust at the top of U.S. government and the and in the corporate world – so what’s new?
Donald Trump and Elon Musk, once allies, have engaged in a heated public feud over a tax and spending bill. The conflict began when Musk criticised Trump’s “Big Beautiful Bill,” calling it a “disgusting abomination” and warning it would increase the budget deficit. Trump retaliated on Truth Social, calling Musk “CRAZY” and threatening to terminate billions of dollars in government contracts for his companies.
Musk fired back on X, claiming Trump would have lost the election without his support and accusing him of being named in the unreleased Epstein files.
The spat has had financial repercussions, with Tesla’s stock plummeting over 14%, wiping out $152 billion in market value. Investors fear the fallout could impact Tesla’s regulatory environment under Trump’s administration.
Tesla 5-day chart
Tesla 5-day chart – 14% fall
Political figures have weighed in, with billionaire Bill Ackman urging the two to reconcile, while Steve Bannon suggested Trump should seize SpaceX under the Defence Production Act. Musk also polled followers on whether to create a new political party, gaining support from Mark Cuban and Andrew Yang.
It got worse
Elon Musk escalated his feud with Donald Trump by making explosive claims that Trump appears in the Epstein files, suggesting that this is why they have not been made public. Musk posted on X, “Time to drop the really big bomb: Donald Trump is in the Epstein files. That is the real reason they have not been made public.
“Have a nice day, DJT!”. He later doubled down, telling followers to “mark this post for the future” and insisting that “the truth will come out”.
Trump has denied any wrongdoing and dismissed Musk’s claims as retaliation for his tax bill. The White House press secretary called Musk’s comments “an unfortunate episode” and insisted that Trump is focused on passing his legislation.
Musk also endorsed a call for Trump’s impeachment, agreeing with a post that suggested Vice President JD Vance should replace Trump. This marks a dramatic shift, as Musk was previously a close ally of Trump and even held a government advisory role.
The feud continues to escalate, with Musk calling for the bill’s rejection and Trump defending it as a historic tax cut.
The position and authority of U.S. President Trump have been challenged. How will tariff trade negotiations and his standing with other world leaders progress from here?
I do have a couple of questions: why did Musk back Trump in the first place and, at what point in the 137 ‘love in’ days did he know about the Epstein link (if indeed there is one)?
Elon Musk has dramatically distanced himself from Donald Trump’s latest tax-and-spending bill, branding it a ‘disgusting abomination’ in a fiery post on X.
The Tesla and SpaceX CEO, once a key financial backer of Trump’s 2024 campaign, has now turned against the administration’s ‘One Big Beautiful Bill’, warning that it will explode the federal deficit and burden American taxpayers with unsustainable U.S. debt.
Musk’s frustration boiled over as he accused lawmakers of reckless spending, calling out those who voted for the bill: ‘Shame on you. You know you did wrong’.
The White House, however, remains unmoved. Press Secretary Karoline Leavitt dismissed Musk’s remarks, insisting that Trump is ‘sticking to it’ and that the bill will drive economic growth.
With Republican deficit hawks rallying behind Musk’s concerns, the billionaire’s influence in Washington is far from over.
His next move? Firing back at politicians who, in his words, ‘betrayed the American people.’
Elon Musk’s fiery critique of Trump’s ‘One Big Beautiful Bill’ has raised concerns for the Department of Government Efficiency (DOGE), an initiative he once led.
His departure from DOGE signals instability (much of which he created) within the agency, which had been pushing for aggressive cost-cutting measures and anti-waste policies.
Without Musk’s influence, DOGE could lose traction, allowing excessive spending to go unchecked. Additionally, Musk’s fallout with Trump might weaken DOGE’s ability to implement reforms, as its credibility is tied to his vision.
The question now is whether DOGE can remain a force for fiscal responsibility, or whether it will become just another bureaucratic arm.
The latest OECD report presents a cautious outlook for the UK economy, predicting slower growth amidst global uncertainties and domestic fiscal challenges.
The UK’s GDP is projected to grow by 1.3% in 2025 and 1% in 2026, reflecting a slight downward revision.
According to the OECD, trade tensions, particularly U.S. tariffs, are disrupting global supply chains and weakening business confidence.
At the same time, consumer sentiment remains low, and business investment is expected to decline, counteracting the benefits of recent government spending initiatives.
A significant concern highlighted in the report is the UK’s public finances. The OECD warns that the government’s limited fiscal buffers could leave the economy vulnerable to future downturns.
It suggests targeted spending cuts and tax reforms, including a reassessment of council tax bands to reflect updated property valuations.
Debt interest
The OECD has warned that high interest payments on government debt and trade tensions are weighing on the UK’s economic growth. The UK’s fiscal position is described as having ‘very thin’ margins, meaning there is little room for unexpected financial shocks – of which there have been many.
Despite these hurdles, the UK is expected to outperform some major European economies, including France and Germany. However, the UK government face a complex challenge, balancing growth stimulation with fiscal responsibility.
The OECD encourages the government to accelerate infrastructure investments and enhance productivity to ensure long-term economic resilience.
Inflation in the eurozone fell to 1.9% in May 2025, dropping below the European Central Bank’s (ECB) 2% target for the first time in months.
This unexpected decline has sparked discussions about the potential consequences for the region’s economy.
The latest data from Eurostat shows that core inflation, which excludes volatile items like energy and food, also eased to 2.3%, down from 2.7% in April.
Services inflation, a key indicator of consumer demand, dropped sharply to 3.2% from 4%. These figures suggest that price pressures are cooling faster than anticipated.
While lower inflation can ease the cost of living for consumers, it also raises concerns about economic stagnation.
The ECB has been gradually cutting interest rates to support growth, and markets are now pricing in a 95% chance of another rate cut this week. However, if inflation continues to fall below target, it could signal weak demand and slow wage growth, potentially leading to deflationary risks.
Adding to the uncertainty, global trade tensions, particularly U.S. tariff policies, are clouding the economic outlook. The ECB will need to carefully balance its approach to ensure inflation remains stable while supporting economic expansion.
As policymakers prepare for their next decision, the eurozone faces a delicate challenge: maintaining price stability without stifling growth.
The Organisation for Economic Co-operation and Development (OECD) has sharply downgraded its U.S. growth forecast, citing economic uncertainty and the impact of President Donald Trump’s tariff policies.
The OECD now expects the U.S. economy to expand by just 1.6% in 2025 and 1.5% in 2026, a significant cut from its previous estimate of 2.2% for 2025.
The report highlights several factors contributing to the slowdown, including elevated policy uncertainty, reduced net immigration, and a shrinking federal workforce.
The OECD also warns that higher trade barriers could further dampen business confidence and investment.
Global growth projections have also been revised downward, with the OECD stating that the slowdown is most pronounced in North America, particularly in the U.S., Canada, and Mexico.
The organisation reportedly notes that U.S. tariff-related disruptions are expected to push inflation higher, although weaker commodity prices may offset some of the impact.
The OECD’s latest outlook underscores the growing challenges facing the U.S. economy as trade tensions persist.
With tariffs fluctuating due to ongoing ‘stop start’ legal interventions, businesses and investors remain cautious about the future.
The coming months will be crucial in determining whether policymakers can stabilise growth and restore confidence in the market.
China’s manufacturing activity took an unexpected hit in May 2025, marking its steepest decline since September 2022.
The Caixin/S&P Global manufacturing PMI fell to 48.3, signalling contraction for the first time in eight months. This downturn comes as U.S. tariffs begin to weigh heavily on Chinese exports, dampening global demand and disrupting supply chains.
The latest data reveals that new export orders shrank for the second consecutive month, hitting their lowest level since July 2023.
Factory output also contracted for the first time since October 2023, reflecting the broader economic slowdown. Analysts attribute this slump to the reinstatement of sweeping U.S. tariffs, which were briefly halted before being reimposed by a federal appeals court.
Despite a temporary trade truce between the U.S. and China, tensions remain high, with both sides accusing each other of violating agreements.
The uncertainty surrounding trade policies has led Chinese manufacturers to cut jobs at the fastest pace since the start of the year, further exacerbating economic concerns.
China’s Premier Li Qiang has hinted at new policy tools, including unconventional measures to stabilise the economy. However, with tariffs set to remain high and structural challenges persisting, experts predict continued pressure on China’s industrial sector.
As the world’s second-largest economy grapples with these headwinds, the coming months will be crucial in determining whether Beijing can implement effective strategies to counteract the impact of tariffs and restore manufacturing momentum.
Caixin/S&P Global manufacturing PMI survey
The report was based on the Caixin/S&P Global manufacturing PMI survey, which is a private-sector survey that tracks China’s manufacturing activity.
This survey is conducted mid-month and covers over 500 mostly export-oriented businesses, making it distinct from China’s official PMI, which samples 3,000 companies and is compiled at month-end.
The Caixin PMI tends to focus more on small and medium-sized enterprises, whereas the official PMI aligns more closely with industrial output.
In May, the Caixin PMI fell to 48.3, marking its first contraction in eight months. The decline was largely driven by shrinking new export orders, which hit their lowest level since July 2023.
The survey also showed that employment in the manufacturing sector declined at the fastest pace since January, reflecting the broader economic slowdown.
One key difference between the Caixin PMI and the official PMI is their timing. The Caixin survey is conducted earlier in the month, meaning it may not fully capture policy changes or trade developments that occur later.
For example, economists noted that the effect of the tariff de-escalation in mid-May may not have been reflected in the Caixin PMI results
Investors are increasingly favouring short-term U.S. Treasury securities, with notable figures like Warren Buffett taking sizeable positions.
This shift is driven by concerns over economic instability, fluctuating bond yields, and government spending.
Short-term Treasuries, such as T-bills with maturities under a year, offer a safer haven compared to longer-term bonds, which are more vulnerable to interest rate changes.
As central banks navigate monetary policy adjustments, many investors prefer the flexibility of short-duration assets that minimise exposure to prolonged economic uncertainty.
One of the biggest influences in this trend is Berkshire Hathaway’s substantial stake in T-bills, which has reinforced confidence in these instruments.
Additionally, ultra-short bond ETFs like SGOV and BIL have seen significant inflows, highlighting the growing demand for liquid, low-risk investments.
Another key factor driving this strategy is concern over U.S. fiscal policy. Investors are wary of rising deficits and potential tax hikes, which could impact long-term bond stability.
By allocating funds to short-term Treasuries, they can mitigate risks while maintaining liquidity.
This surge in short-term Treasury investments reflects a broader shift in market sentiment-favouring stability and flexibility over long-term speculation.
As economic uncertainty persists, investors are likely to continue this defensive strategy.
SGOV & BIL ETFs explained
SGOV and BIL are both exchange-traded funds (ETFs) that invest in U.S. Treasury bills, offering a low-risk way to earn interest on short-term government debt.
SGOV (iShares 0-3 Month Treasury Bond ETF) tracks the ICE 0-3 Month U.S. Treasury Securities Index, investing in Treasury bonds with maturities of three months or less. It launched in 2020 and is known for its low expense ratio.
BIL (SPDR Bloomberg 1-3 Month T-Bill ETF) follows the Bloomberg 1-3 Month U.S. Treasury Bill Index, focusing on Treasury bills with maturities between one and three months.
It has been around since 2007 and is one of the largest T-bill ETFs.
Both ETFs provide exposure to ultra-short-term government securities, making them attractive options for investors seeking stability and liquidity in uncertain markets.
