President Trump Hints at Trade Deal; Why the Fed Left Rates Unchanged
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Good morning, I'm Nathan Hager. And I'm Lisa Mateo. Lisa, the lift in stocks this morning comes as the U.S. is set to unveil its first major trade deal. Bloomberg News has learned President Donald Trump will announce an agreement later this morning with the U.K. And that announcement will come in Washington. We begin our team coverage this morning with Bloomberg News Senior Editor Derek Walbank.

Well, I think it's significant in a couple of different ways, regardless of what's actually in it, because it's going to provide a framework for seeing what is going to be able to lower the temperature in trade talks with the United States. This has been one of the things we've seen since the Liberation Day stuff in early April. There has been a giant question of what it was going to take to get an actual deal inked. It looks like it's going to be the first deal of some substance.

Bloomberg's Derek Walbank says any deal would come with significant caveats. Full-scale trade pacts typically take years to negotiate. Nathan, UK Premier Keir Starmer also speaking about the trade talks. Bloomberg's Ewan Potts continues our team coverage from London. Good morning, Ewan. A deal with the United States has long been the holy grail of UK trade policy. Imports from and exports to the world's biggest economy total more than $300 billion a year.

and account for £1 in six of all UK trade. But politically, a deal has always been fraught with risk for the UK, with many fearing a lowering of food standards and more corporate involvement in the healthcare sector. UK Prime Minister Keir Starmer spoke in London this morning. The United States, an indispensable ally for our economic and national security. As you know, talks with the US have been ongoing, and you'll hear more from me about that later today.

UK Prime Minister Keir Starmer. Bloomberg understands that recent talks have included reducing US tariffs on cars and steel, with tech and AI another focus of negotiations. But how far the two sides strayed into more controversial policy areas and how deep the tariff cuts will go, well, we'll find out later today. In London, I'm Ewan Potts, Bloomberg Radio. All right, Ewan, thank you. Meanwhile, President Trump says he is not willing to lower tariffs on China to spur more substantive trade negotiations there.

We get that story from Washington and Bloomberg's Amy Morris. During the swearing-in ceremony of Trump's new ambassador to China, David Perdue, a reporter asked the president if he would pull back those 145 percent duties on Chinese imports. Are you open to pulling back your tariffs in order to get China to the negotiating table? No.

President Trump has said that he is willing to lower tariffs on China at some point, but also that U.S. consumers should be ready to accept some higher prices. The president's comments came just a day before Treasury Secretary Scott Besant and Trade Representative Jameson Greer are set to meet in Switzerland with China's vice premier on trade.

In Washington, Amy Morris, Bloomberg Radio. All right. Thanks, Amy. Tensions continue to escalate between India and Pakistan. This morning, Pakistan's military says it shot down more than two dozen drones from India in an attack that killed one civilian and wounded four soldiers. This follows a day when India struck what it called known terror camps inside Pakistan, killing 31 people, according to Pakistani officials.

Hostilities have been rising since a militant attack in the disputed Kashmir region last month that killed 26 people, most of them Indian Hindu tourists. Lisa, Bloomberg News has learned the Trump administration plans to rescind Biden-era AI chip curbs in a bid to revise semiconductor trade restrictions. The existing measures have been heavily criticized by major tech companies and foreign governments.

The repeal is yet to be finalized, but it looks to abolish the tiered system that was created to regulate chip exports from the likes of NVIDIA and other firms. Bloomberg News senior tech editor Michael Shepard says the move would be a victory for Big Tech. It's a win for NVIDIA, which has pressed for a total repeal of these chips curves. It's known as the AI diffusion rule, and it really has caused a lot of consternation in the industry because they see it as something that will have the perverse effect of throwing chips

countries and their companies into China's arms seeking access to advanced AI technology. Bloomberg's Mike Shepard says the Trump administration won't enforce the curb known as the AI diffusion rule when it takes effect on May 15th. Chip stocks led by Nvidia are

rising this morning. NVIDIA shares are higher by nearly 2%. And turning to the economy now, Nathan Fetcher, Jay Powell says the future of interest rates will not be determined until there is more clarity over trade policy. Let's get the latest with Bloomberg's John Tucker. John. Good morning, Lisa. The message from Powell and the Fed is there's no rush to cut rates. We don't think we need to be in a hurry. We think we can be patient. We're going to be watching the data.

The data may move quickly or slowly, but we do think we're in a good position where we are to let things evolve. Powell and his colleagues held the interest rate steady. Former New York Fed President Bill Dudley says tariff uncertainty leaves the Fed little choice.

So in that environment, it's sort of like the Hippocratic Oath, do no harm to your patient. Powell acknowledged that consumer and business sentiment had darkened amid the erratic tariff announcements, but he also said the hard data still paint a picture of a healthy economy. Well, the futures markets show investors still expect three interest rate cuts this year with odds of a cut as early as July at about 85%.

In New York, I'm John Tucker, Bloomberg Radio. All right, John, thanks. We've got a few rate decisions in Europe this morning. The central banks in Sweden and Norway left their policy rates unchanged. In the UK, the Bank of England is expected to cut rates a quarter percentage point. Economists say the BOE may signal another move in June, potentially putting that central bank on course for its first back-to-back reductions since 2009. And checking some stocks on the move this morning.

arm holdings down about 10%. The chip company gave a lackluster sales forecast for the current period, saying that the timing of the new licensing agreements has made it cautious about predictions for the future. And Lisa, Google is recouping some of its 7% decline from yesterday. In the pre-market, it's up 2%. That follows news that Apple is considering a revamp to its Safari web browser to focus on AI-powered search engines.

Apple's senior vice president of services, Eddie Q, made the disclosure during testimony in the Justice Department's lawsuit against Google parent Alphabet. Bloomberg Tech reporter Jackie Davalos says the move could potentially end Apple's lucrative long-time partnership with Google.

When it comes to large language models, there's a new model out almost every month. And I think it shows an openness to remaining nimble with the different players out there. It might be open AI one day, but you have other smart competitors like a perplexity. So it really shows that they're not taking a one company approach this time. They're going to diversify. Bloomberg's Jackie Davalos adds Apple's edEQ believes AI search engines could replace standard search engines like Google.

It is time now for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Michael Barr. Good morning, Michael. Good morning, Lisa. The New York Police Department says more than 70 people were arrested after masked protesters occupied Columbia University's main library. Police entered Butler Library hours after protesters, many wearing face coverings, took over part of the building and draped Palestinian flags along its walls.

This Columbia student was critical of the university. It is a disgrace to a elite university that this is still allowed to happen again, especially during finals. It's the same repetition as last year, and most protesters and administration has apparently learned nothing. Following pro-Palestinian protests on the campus last year, the Trump administration cut more than $400 million of federal funding to Columbia, accusing the Ivy League university of failing to protect Jewish students from harassment.

The cardinals of the Catholic Church returned to the Sistine Chapel this morning for more votes on a new leader of the church. It comes after day one of the conclave did not elect a new pope. At the Vatican, Reverend Tom Rees, senior analyst for the Religion News Service, says the vote went as expected. I guess it went longer because we had more cardinals than last time. 133, 20% more cardinals than were here last time.

At least two-thirds majority is needed or 89 votes from the Cardinals. In the crowd of thousands in St. Peter's Square, this woman from Chicago says she's praying for whoever is elected. We're just so divided as a world. So it would be nice to just have someone with a lot of love.

Still no jury yet in the trial of music mogul Sean Diddy Combs facing sex trafficking charges. It took three days to get 45 prospective jurors in place, but the judge wants to do a final selection on the jury tomorrow. Opening statements are set for Monday. President Trump is tapping Casey Means to be the next U.S. Surgeon General after his prior nominee was withdrawn shortly before her confirmation hearing.

Means replaces his prior nominee, Jeanette Nesawat, who came amid pressure from far-right activists like Laura Loomer, who criticized Nesawat for being pro-vaccine. Global News, 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Lisa. Thank you, Michael.

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It is time now for our Bloomberg Sports Update. For that, we bring in John Stashower. Hey there, John. Hey, Lisa. The Knicks won game one in Boston by coming back from a 20-point deficit by forcing the Celtics into far too many missed three-pointers and with Mikkel Bridges making a big defensive play at the end. 48 hours later, all of that happened again.

in game two. Knicks with a fourth quarter run of 21 to 2. Celtics missed 13 shots in a row, didn't score a basket for eight minutes. Jalen Brunson scored with two minutes left for the Knicks' first lead of the night. They went back ahead on two Brunson free throws with 12 seconds remaining. Last chance for Boston. It's Tatum. Robinson's on him. Tatum maneuvering. Over the block, they've got it to none! Oh, man.

And defense again at the end. On TNT, it was Bridges making the play on Jason Tatum as he did on Jalen Brown in Game 1. The Knicks won 91-90, now come home for Game 3 Saturday. So some time for the Celtics to think about 75 missed three-point shots over the first two games. After road teams were 6-0 in the second round, Oklahoma City did win at home by 43 over Denver. That series tied at 1. Golden State plays Game 2 tonight at Minnesota.

Steph Curry won't play due to a hamstring injury. Stanley Cup playoffs, Toronto beat Florida 4-3, leads the series 2-0. Dallas won game one at Winnipeg 3-2. At the stadium, the Yankees held hit list by San Diego's Dylan Cease until the seventh inning, but late home runs by Cody Bellinger and Trent Grisham. Yanks went on to beat the Padres 4-3 in 10 innings. Mets won 7-1 at Arizona, won Soto Homer twice.

The Ryder Cup coming to Long Island in September. The PGA is giving away 3,000 free tickets, doing it randomly at Bethpage Black and other area golf courses. John Staschauer, Bloomberg Sports. Lisa and Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. Earlier this week, President Donald Trump hinted at something coming this week during his Oval Office meeting with Canadian Prime Minister Mark Carney. We're going to have a very, very big announcement to make. Like, as big as it gets. And I won't tell you on what.

And it's very positive. And this morning, we may know what that announcement is. Bloomberg News has learned President Trump will unveil a trade deal with the United Kingdom in an Oval Office news conference later this morning. Joining us ahead of it, Rosalind Matheson, Bloomberg's news director for Europe, the Middle East and Africa. Ros, it's great to speak with you this morning. We do know that the president has an announcement from the Oval Office on his schedule officially. What more do we know about what we're expecting at 10 a.m. Wall Street time?

Well, as you say, what we're expecting at least is an announcement of some kind of trade deal agreement slash framework between the US and the UK. This is probably not going to be a full-throated trade deal. Those things take years to negotiate, let alone implement. But what it might be at least is a bit of a roadmap.

for the conversation going forward. So a framework, an MOU for how talks between the two will proceed in a sense of the parameters for those conversations. I guess the question we're all wondering is will it include any immediate tariff relief for the UK, particularly around two things, steel and cars? And the UK has also been very concerned about pharmaceuticals

And increasingly also the film industry in just recent days. But will it be that specific? Will it lead to some kind of understanding that allows the UK to get immediate tariff relief from the US even as these conversations go on?

So it'll be interesting because for other countries who are looking on, it might provide a bit of a framework or a guide to how to proceed themselves with the U.S. And obviously the U.K. would be able to claim at least that first mover advantage with the U.S., with Donald Trump saying we are the first country in the queue to have achieved this goal.

How significant is it, Roz, for the U.S. to have that first mover advantage when so much of the focus with Treasury Secretary Scott Besson talking about these ongoing talks with something like 17 or 18 countries being on trade partners in Asia and India specifically as well?

Well, obviously, it comes ahead of the US-China talks this weekend, which will be potentially very significant, again, of feeling our exercise between those countries. But as you say, you know, big economies in Asia, Japan, India, we're possibly hoping to get there first. And it's not as though they're rushing to negotiate a deal that, you know, a bad trade deal, a quick deal. What they want, at least, is to be able to say that they've reached that MOU level, you

with the US of understanding of how to proceed with more specific trade talks. And with Donald Trump, it's about the psyche of how you negotiate and deal with the US president. That getting in the first, in the line, that probably means something at least. You're going to stick in Donald Trump's head as the country that was first able to get there, to meet his expectations enough to announce something. And he likes to announce a win. So...

For the U.K., symbolically, it's probably a bit of something and maybe a little bit disappointing as a result for countries like India and Japan. I want to talk a little bit more about that symbolism as well for the U.K., Roz, because, I mean, this was a golden ring for Boris Johnson after Brexit. And Rishi Sunak kind of put a bilateral trade deal on the sidelines a bit. How significant is it that Keir Starmer potentially is going to get this deal? Got about a minute left.

Pretty good for him. Although, again, the question is how much does trade sell to voters? And there's a lot of complications here. UK voters won't want to see something that they feel is negative for the UK. And there's lots of tricky issues here around agricultural goods, drug pricing, tech and AI even, and so on. So they'll be scrutinising this to see, you know, what are the parameters for the conversation going forward and how much does it benefit or not the UK. But a bit of immediate tariff relief would obviously be welcome, no doubt,

as well, so Keir Starmer might be able to claim the win on that. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen. You can also listen live each morning starting at

5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast to coast on the Bloomberg Business app, now with Apple Podcasts.

CarPlay, and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Nathan Hager. And I'm Lisa Mateo. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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