Multiple Fed Cuts, Trade Deal Path Plot, Uncertain Yuan: Eco Day

(Bloomberg) -- Welcome to Friday, Asia. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

• Economists now expect the Fed to cut interest rates multiple times this year -- coming round to investors’ view, though they haven’t gotten all the way there yet. It’s too early to know whether policy makers should cut and whether such a reduction should be a quarter or half percentage point, San Francisco Fed chief Mary Daly said
• Tom Orlik plots a potential path forward for U.S.-China trade talks. In the Chinese export heartland of Foshan, it’s not Donald Trump‘s tariffs that have Li Yuanfa fearing for the future, but the broader economic uncertainty they bring. Firms are getting serious about trade-war contingency plans, and policy makers are talking stimulus
• Forecasters penciling in year-end projections for the yuan may want to keep their erasers handy. With the course of the U.S.-China trade war at stake, Saturday’s presidential meeting has the potential for major currency implications. Here’s how currency wars are like real wars for wealth. A narrowing yield gap with the U.S. may complicate matters for central banks that would benefit from weaker currencies
• Trump’s talk of slapping tariffs on auto imports is one threat Tokyo can’t ignore. Potential levies on Japan’s biggest manufacturing industry could tip the scales for an economy that is already in a vulnerable spot. Meanwhile, Shinzo Abe praised warming ties with China on Xi Jinping’s first visit to Japan in a decade
• The White House is developing a plan to cut taxes by indexing capital gains to inflation, in a move that would largely benefit the wealthy
• Markets were shocked when Chile cut rates, but the central bank had a simple answer: The economy suddenly had a lot more people in it
• Envoys at UN climate talks finished two weeks of talks with little progress on cutting pollution as a heatwave scorched Europe’s cities
• Cocaine production globally reached a record in 2017 and that translated to declining prices in the U.S., according to a UN report

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Michelle Jamrisko

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