EM LATAM CREDIT: Launched: Minera Mexico SA (SCCOMX; Baa1neg/BBB+/BBB+)

A recent report from Axios illustrates the 'historical headwinds' US President-elect Donald Trump is facing if he is to successfully reduce the US trade deficit with China, noting the trade deficit with China “has been larger than $200 billion since 2005."

• Axios: "It reached a record high of $418 billion in 2018, Trump's second year in office…. The tariffs imposed on China during the first Trump administration, which were then kept in place by President Biden, did relatively little to change that dynamic. During Trump's first term, when imports fell, exports fell too, blunting the effect on the trade deficit.”
• Axios adds: "For the time being, the market seems to be reasonably sanguine when it comes to the threat of a trade war. Maybe that's because no such thing has happened in the lifetimes of today's traders, and maybe it's because the sheer force of money flowing between China and the U.S. seems impossible to significantly disrupt..."

Figure 1: US Trade with China, 1992-2004

Source: Axios, USA Trade

For the March SNB meeting, markets currently price about 25bps of easing - one full, regular cut. Through the December 2025 meeting meanwhile, markets expect around 50bps of cumulative easing - which would take the SNB policy rate down to 0.0%. 

• President Schlegel expressed discontent with the potential of a negative policy rate in the aftermath of the December policy meeting, so the bar to cuts below that neutral threshold appears quite high for the time being.
• In FX, EURCHF has bounced well from the double bottom formed around 0.9210 and has been oscillating either side of 0.9400 in recent sessions.
• More notably, and despite Monday's pullback, the underlying trend condition for USDCHF remains in firm bullish territory, after printing a seven-month high last week. 0.9158 and 0.9224 remain key medium-term targets, with initial resistance moving up to 0.8995, the 20-day EMA.

US crude oil inventories are expected to have fallen by 0.3m bbl in the week to Jan. 3, according to a Reuters survey.

• Responses ranged from -2.0 bbl to +2.8m bbl.
• Distillate inventories, mainly diesel, are seen with a rise of 0.5m bbl. Responses ranged from -3.3m bbl to +4.0m bbl.
• Gasoline inventories are expected to have risen by 0.5m bbl. Responses ranged from -3.2m bbl to +3.7m bbl.
• Refinery capacity use is projected to be up 0.2 percentage points at 92.9%.
• The official figures will be released by the EIA at 10:30 ET Jan. 8.