A.M. Edition for May 21. House GOP leaders and Republicans from high-tax states appear to be nearing an agreement on state and local tax deductions, as President Trump’s giant tax and spending deal inches toward a vote. Plus, WSJ columnist Jon Sindreu unpacks why recent volatility in the treasury market matters to more than just bond investors. And in the latest electric vehicle pull back, Ford is letting rival Nissan share its flagship U.S. battery plant. Azhar Sukri hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Why are bond yields important for investors?
A small wobble in the bond market was seen as more important than a big fall in the stock market.
Because treasuries are the bedrock of global finance and they're not just allowing the federal government to carry on, they're allowing the entire economy to carry on.
And Ford lets rival Nissan share its flagship battery plant as it pairs back its EV ambitions. It's Wednesday, May the 21st. I'm Azhar Sukri for The Wall Street Journal, filling in for Luke Vargas. Here is the AM edition of What's News, the top headlines and business stories moving your world today.
Chapter 2: What is the significance of the SALT deduction agreement?
House GOP leaders and Republicans from high tax states appear to be near an agreement on the state and local tax deduction. That's according to people familiar with the discussions. The agreement would set the cap on the so-called SALT deduction at $40,000. That's up from $10,000 this year and is higher than the $30,000 figure in the current version of the Republican fiscal bill.
The GOP's giant tax and spend bill could reach the House floor as early as today, but faces stark opposition from Democrats who argue that the proposed cuts to Medicaid and food aid programs are funding tax cuts for the wealthy. Here's House Minority Leader Hakeem Jeffries.
Chapter 3: How does Trump's tax and spending bill affect healthcare?
The Republicans are trying to jam this big... ugly bill down the throat of the american people and because of the fact that almost 14 million people will lose their ability to access healthcare people will die
According to the Congressional Budget Office, the bill's tax and spending cuts would decrease resources for the bottom 10% of households by 2%, while increasing resources for the top 10% of households. Joe Biden's office says he was last screened for prostate cancer in 2014. That indicates that the former president wasn't screened for the disease during his four years in office.
Biden's office said Sunday that he has an aggressive form of prostate cancer that has spread to his bones. The diagnosis raises questions about how the president, with the best healthcare at his disposal, could have learned so late that he was suffering from a fairly common form of the cancer for men his age.
Chapter 4: What were the implications of Trump's meeting with South Africa's President?
Meanwhile, a high-stakes meeting between South African President Cyril Ramaphosa and President Trump is taking place at the White House today. Since returning to office, Trump has cut off foreign aid to South Africa, decried the South African government's stance on Israel and invited Afrikaners, descendants of Dutch, German and other settlers, to immigrate to the US as refugees.
Our reporter in Johannesburg, Alexandra Wexler, says there's a lot riding on this meeting, with Africa's largest economy facing steep tariffs too.
So Ramaphosa is hoping to reset South Africa's relationship with the US, especially from a trade standpoint. He hopes to talk about investment opportunities in sectors like energy and automotive manufacturing and healthcare. In addition, Ramaphosa is hoping to dispel what he has called misinformation about
Trumps View of what's happening in South Africa, including what Trump has called a genocide against white farmers. So although South Africa is one of the world's most violent countries with an extremely high murder rate, black people are in fact murdered at higher rates in South Africa than white people. And so the accusations of a white genocide are unsubstantiated.
The impact of Trump's trade agenda is becoming more apparent, with data from two major economies this morning showing broad declines in exports to the US. Finance editor Alex Frangos says it's the first data covering the period since reciprocal and auto and steel tariffs came into force.
Die Daten zeigen die Bedeutung dieser Gespräche zwischen all diesen Ländern, aber vor allem den großen Handelsnationen mit den USA, Korea und Japan. Wir sehen, dass die Ausgaben in den USA steigen. Und auf der Oberfläche der reziprokalen Tarife gibt es auch Automobiltarife. 25%, which is a huge deal.
They have big automotive sectors that are highly integrated with the U.S., not just exporting cars to the U.S., but also parts and companies like Hyundai and Toyota have big factories in the U.S. And so there's all sorts of things going back and forth.
Tariffs aren't the only thing roiling the auto sector, with car makers across the industry pulling back on their EV ambitions. We're exclusively reporting that Ford will let rival Nissan use part of its flagship US battery plant.
Das kommt, als Ford 5 Billionen Dollar in ihrem Elektrofahrzeug-Business letztes Jahr verloren hat und noch 5 Billionen Euro dieses Jahr verlieren wird, im Hinblick auf eine Schleimhaut in der VW-Demand. Ford ist nicht allein im Kühlen der VWs.
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Chapter 5: How are tariffs affecting the automotive industry?
Honda hat gestern gesagt, dass es seine Investitionen in elektrische Autos mit mehr als 20 Billionen Dollar in den kommenden Jahren reduzieren wird, als die Demandgröße schlägt. And a new report by the International Energy Agency has found China continues to dominate the global supply of critical minerals.
China is the leading refiner for 19 of the 20 strategic minerals tracked by the IEA, accounting for up to roughly 80% of global supply growth of copper and lithium between 2020 and 2024. Governments worldwide are ramping up efforts to secure supplies of these minerals due to their use in everything from green energy technologies to artificial intelligence and defense.
Critical minerals are also a key national security priority for the Trump administration, which has sought to break China's dominance over the sector. Coming up, we'll explain why the bond market's recent wild ride is alarming for politicians and your finances. That story after the break.
US Treasuries have been on a rollercoaster ride since Donald Trump's tariff announcements kicked off a sell America trade that saw bond yields surge and the dollar slip. This week Moody's downgraded the US from its top-notch credit rating, sending the yield on 30-year treasuries briefly above 5%. That's the highest level it's been so far this year, alarming many investors.
Journal-Herd-on-the-Street-Kolumnist John Sandreo ist hier, um das für uns zu beantworten. John, erzähl uns, warum der normalerweise stabile Bond-Markt so volatil ist.
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Chapter 6: What is the current state of electric vehicle investments?
Well, broadly speaking, the way it's behaving, because you just don't get a lot of return for buying bonds relative to cash. So, Wir sprechen von 30-Jahre-Bonds, die zu 5% steigen, und das ist eine Art psychologische Barriere für den Bond-Markt. Aber die Interestrate sind zwischen 4,25 und 4,5%. Das ist wie das Geld in den Cash zu behalten, oder?
Jetzt gibt es dir fast so viel, wie wenn du es für 30 Jahre locken würdest. Also warum solltest du einen 30-Jahre-Bond kaufen? Das ist generell der Hauptgrund, warum Bonds verkauft werden.
Und ich denke, das ist ein wichtiger Punkt, den die Leute manchmal vergessen, nämlich viele dieser Momente, in denen die Bondsmärkte politisch werden, tendieren sich mit Momente zu verabschieden, in denen die Inflation kommen könnte und der Zentralbank, der vielleicht zu niedrigeren Raten gedacht hätte oder sie von weniger erhöht hätte, plötzlich von der Möglichkeit der Inflation verabschiedet wird.
Und wir sehen das jetzt. Die Auswirkungen dieser Tarifpolitik sind, dass, obwohl die The market and officials are concerned about economic growth in the US. The Federal Reserve may not be able to lower rates as much as we were thinking about just a few months ago because tariffs will create inflation. The market still expects some rate cuts, but far fewer of them.
Chapter 7: Why are critical minerals essential for global supply chains?
And we will even see if those happen, right? So in this context, yeah, bonds suddenly become less attractive.
Okay, so that explains some of the bond sell-off, which seemingly also caught President Trump's attention when his trade announcements were roiling the markets in April.
And that, I think, is the big important element here. So what we saw, for example, in the UK in 2022, is that the moment the Bank of England said that they were going to buy bonds to offset the sell-off, the market calmed down. It's important to say this because if you look at a country like Argentina or even some stronger emerging markets,
When they have a debt crisis and the central bank says, oh, I'm going to print money and I'm going to buy the debt, the markets freak out, right? It's the opposite effect. What we saw in the UK is the Bank of England stepped in, but not too much, right? Because they didn't want to be seeing us bailing out the prime minister. And indeed, the prime minister ended up going out the door.
We saw a similar thing with the initial Liberation Day tariff announcement. Wir wissen von den Berichten unserer Kollegen bei WSJ, dass der Präsident sich um den Bond-Markt interessiert hat und dass ein kleiner Wobbel im Bond-Markt als wichtiger war als ein großer Fall im Stock-Markt.
Denn tatsächlich sind Treasuries das Bedrock der globalen Finanzierung und sie erlauben nicht nur dem föderalen Regierung, sondern sie erlauben der gesamten Ökonomie, weiterzumachen. So yeah, the potential risk is a scary one. That being said, those moves were not that significant.
Like if we look at where treasury yields were at the beginning of the year, they were higher than the yields that scared off the administration. But yeah, when the market suddenly for whatever reason has a hiccup, it reverberates through politics. That's absolutely the case.
So looking ahead, John, what else could move the bond market in the coming weeks and days? What else should we be aware of here?
I ultimately think it's about the tariff uncertainty. When we look at the market for inflation link swaps, what we see is that investors are pricing in a small increase in inflation over the next year as these tariffs feed through. If we look at, for example, Europe, the UK, we further break
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