Newscasts - Business Lookahead: TACO trade and rare earths

SUZUKI MOTOR

06/06/2025 19:25

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Source: 'Reuters - Business videos'

Description: From investors catching on to Trump's tendency to U-turn on trade to the impact of China's export restrictions on rare earths, these are the stories to watch in business and finance in the coming week. Olivia Zollino reports.

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Video Transcript:

From investors learning the TACO trade to China's rare earths, these are the stories to watch in business and finance in the coming week. The high-voltage volatility that shook markets earlier in the year has subsided, with investors becoming accustomed to Trump's on-again-off-again approach to anything from tariffs to personal relationships. This tendency to U-turn is being dubbed the TACO trade, or Trump Always Chickens Out. Wall Street's fear gauge, the VIX Index, has slipped back below the 20-line that many view as a watermark. There have been just seven days when the VIX has popped above 20 in the last month, compared with every day from April 2 Liberation Day to early May. Investors are hoping any rise in Wednesday's May consumer inflation report won't be as severe as feared. While recent data shows inflation falling close to the Federal Reserve's 2% target, price pressures in manufacturing and services sectors are picking up. The Fed's most recent Beige Book showed economic activity is weakening. Washington and Beijing's trade spat has brought a familiar issue back to the surface. China has a stranglehold on the global supply of so-called "rare earths," and after Beijing restricted exports, the auto industry is feeling it. Suzuki has suspended production of the Swift subcompact, weeks after Ford did the same for its Explorer SUV. Chinese trade data and inflation figures are due on Monday. The UK Labour government's first spending review is set for Wednesday. Public debt has swelled, leaving Finance Minister Rachel Reeves minimal headroom to avoid breaking self-imposed fiscal rules and less able to resist tax hikes. Businesses and borrowers may prefer higher taxes if that lowers the odds of bond vigilantes showing up.