5 Things You Need to Know to Start Your Day

Good morning. The US and EU work to undo Trump-era steel tariffs, Biden’s plan to upstage Putin and Xi, and China’s credit wreck puts off bo [Bloomberg]( Good morning. The US and EU work to undo Trump-era steel tariffs, Biden’s plan to upstage Putin and Xi, and China’s credit wreck puts off bond buyers. Here’s what’s moving markets. Steel Tariffs The US and European Union are working on [an agreement that would introduce new tariffs]( aimed at excess steel production from China and other countries, as well as put behind them a Trump-era trade conflict. The levies would primarily be focused on imports from China that benefit from non-market practices, according to people familiar with the discussions, who said talks were ongoing. The agreement would be part of the so-called Global Arrangement on Sustainable Steel and Aluminum that the EU and the Biden administration have been negotiating since 2021. The talks are aimed at settling a dispute that started in 2018 when President Donald Trump slapped tariffs on metals imports from Europe. In 2021, the two sides agreed to pause that 25% tariff on each other’s goods, and set a deadline of Oct. 31 this year for finding a permanent solution. Biden’s Chance President Joe Biden [aims to seize on the absence]( of Russian President Vladimir Putin and Chinese President Xi Jinping at this week’s Group of 20 leaders meeting in New Delhi to make fresh inroads with countries that those leaders have previously courted. He’ll take the US case to nations such as Brazil, South Africa, Indonesia and the host, India, that are eager for closer ties with China and have declined to take sides after Russia’s invasion of Ukraine. Central to his effort is a push to boost the funding and scope of the World Bank and other development banks, a push for debt relief for poor countries, and funding for new infrastructure projects. China Credit Weak disclosure standards and conflicting communications are angering global bond buyers of China’s property companies, leaving them deeply wary of investing in the country going forward. As dozens of debt-saddled property companies, including industry giant Country Garden, struggle to stave off defaults, international money managers say weak governance and disclosure practices are putting them off mainland borrowers longer-term. [Our Big Take]( looks at how this could lead to diminished access to financing and higher borrowing costs for years to come, further hamstringing China’s already sputtering economy. Stocks Weaken The S&P 500 fell 0.4% as of 10:42 a.m. in New Yorkre, with tech stocks leading declines after news of China’s plan to [ban more iPhones]( from government departments. Treasury yields moved lower after a surge on Wednesday in reaction to stronger-than-expected services data. Bets that the resilient US economy will give the Fed room to tighten policy further is propping up the dollar again. The Bloomberg Dollar Spot Index is on track for its eighth consecutive week of gains, which would be its longest streak in data going back to 2005. bbg://news/video/401782079 WATCH: China Seeks to Widen iPhone Ban to State Agencies, Firms Coming Up… Data at 8:30 a.m. showed a smaller-than-expected increase for initial jobless claims. Fed speakers on the calendar include New York Fed President John Williams, who will participate in a moderated discussion at the Bloomberg Market Forum. Atlanta Fed President Raphael Bostic also speaks at an event in Florida. DocuSign releases earnings after the bell. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - The [Texas power grid]( is teetering on the edge of blackouts - Saudi Arabia looks to [mining metals]( for a new source of wealth - Swatch’s new [budget luxury timepiece]( is a $400 diver’s watch - Gulf royal’s $1.5 trillion empire draws [bankers and billionaires]( - Mercedes-Benz’s [little G-Wagen]( will be electric, not cheap - Self-driving cars [might finally be for real]( this time - [UK house prices]( fall the most in 14 years, [London down 4.1%]( And finally, here's what Joe’s interested in this morning US economic data is going to be a little bit quiet for awhile. There's nothing big today or tomorrow. The next big report will be on Wednesday, when we get the August CPI report. So in the meantime, we're kind of looking for scraps, or watching the chart of oil. That being said, yesterday we got the latest Beige Book, the compendium of anecdotal commentary about the economy from across all the Fed Districts. Obviously you can only go so far with something like this, but one thing that stands out is the number of nuggets that point to easing inflation and ongoing healing in supply chains. Here's a few nuggets from across the Regions: Richmond: "A plumbing supply company said material costs had fallen and they were passing along those savings by lowering their prices. Several service providers noted that wage pressures eased as the availability of labor improved somewhat, which helped to slow the increases in labor costs." Cleveland: "General price pressures were largely unchanged from those in the prior reporting period. However, compared to the number of contacts early in the year, a narrower set of contacts was willing (or able) to push through price increases." Philadelphia: "Most contacts noted ongoing improvements in the supply chain, with a return to normal for many. Despite the up-tick, sentiment weakened, as expressed by one contact, who said, "The chatter is things are slowing down; we are just not seeing or experiencing [a recession]." Large firms with extensive linkages to the broader economy also noted steady activity and no signs of a recession." Boston: "Manufacturing contacts, with one exception, reported stable or decreasing prices, and transportation costs in particular were lower. However, one manufacturer continued to post high single-digit price increases in order to offset increases in labor and nonlabor expenses. Contacts were sanguine that inflationary pressures would continue to ease moving forward." Kansas City: "Both manufacturing and service contacts reported compression in their profit margins in recent months, as businesses were unable to pass all their higher costs onto customers." Dallas: "Oilfield services firms noted some input price softening as supply chains improved." So generally, things were encouraging, though again anecdotal. That being said, there is one category that really stands out where inflation is not easing, and that is insurance. Here are some comments to this effect from across the districts: New York: "Both service firms and manufacturers reported that input price increases picked up a bit in recent weeks. One contact noted substantial increases in insurance costs." Atlanta: "Property and liability insurance costs in coastal areas remained a top concern regarding housing affordability and firms' investment plans." Kansas City: "Housing providers faced more difficulty building new, and maintaining existing, affordable rental properties because of substantial increases in financing and insurance costs. In Colorado, property insurance premiums reportedly rose as much as 30-50 percent over the last year, due in part to increased weather-related claims." San Francisco: "...strong price pressures persisted for other product and service categories, including utilities, insurance, used vehicles, packaging, and some construction materials such as cement and gypsum." Find the [full Fed Beige Book here](. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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