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Trump mulls joining the TPP, and says the U.S. and China may not levy tariffs on each other after all. Also, Hong Kong intervened in the FX market. Here are some of the things people in markets are talking about.

Trump Talks TPP and Tariffs

President Donald Trump told lawmakers he is considering rejoining the Trans-Pacific Partnership, the Asia-Pacific trade pact he withdrew from shortly after taking office.  “He multiple times reaffirmed the point that TPP might be easier to join now,” said Senator Ben Sasse. Trump also said the U.S. and China may ultimately end up levying no new tariffs on each other. “I think they’re going to treat us really fairly,” he said of China. Markets went risk-on, with U.S. stocks advancing 0.8 percent. U.S. Treasury 10-year yields rose to around 2.84 percent. And former U.S. Treasury Secretary Hank Paulson said he sees the U.S.-China impasse ending in “a win for both countries.”

Hong Kong's FX Intervention

The Hong Kong Monetary Authority bought the local currency for the first time since the current trading band was imposed in 2005, after the exchange rate sank to the weak end of its permitted range. The de facto central bank purchased HK$816 million ($104 million) on Thursday. The intervention is significant because the HKMA’s purchases have the potential to boost borrowing costs by draining liquidity. That would signal the end of an era of ultra-cheap money that made Hong Kong the world’s least affordable market for housing and propelled equities to all-time highs.

China Shows Its Muscle

President Xi Jinping presided over the biggest naval fleet review since 1949 in the South China Sea and called on his nation to build a world-class navy, while the government scheduled a live-fire military drill in the Taiwan Straits for next week. Xi urged the navy to stay on high alert, safeguard national interests and also strengthen the leadership of the Communist Party, according to a statement on the website of the Ministry of National Defense Thursday. The military exercise, to be held on April 18 off its coast opposite Taiwan, is the first to be disclosed in at least two years.

India’s Inflation

Inflation may be easing in India, as data on Thursday showed, but there are mounting risks. At the top of the list is Prime Minister Narendra Modi’s plan to raise the prices of food crops to help distressed farmers, a key voter base. His government is seeking to pay farmers at least 50 percent more than the cost of their produce, boosting the retail prices of about a dozen monsoon-sown crops, due for harvest in October.  The plan will help Modi fulfill his promise of raising incomes to placate farmers saddled with higher debt amid falling commodity prices, and shore up his support ahead of federal elections early next year. But it’s expected to fan prices at a time when oil is surging, putting further pressure on bond yields.

Coming Up…

The end of the week will see Singapore in focus as the city state reports 1Q GDP and its central bank announces policy. There will also be releases on trade from China and India that will be perused for clues on how the global economy is traveling, while Australia's central bank releases its half-yearly financial stability review. And the U.S. day will bring the excitement of earnings reports for Citigroup, Wells Fargo and JPMorgan.

What we’ve been reading

This is what caught our eye over the last 24 hours.

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