CANADA ECONOMICS

NAFTA

Global Affairs Canada. May 17, 2018. Minister of International Trade to visit Ohio to highlight strong Canada-United States trade relations

Ottawa, Ontario - Canada and the United States enjoy the most successful bilateral trading relationship in the world, and the North American Free Trade Agreement (NAFTA) is an important component of this relationship. Our two countries not only sell to each other, we make things together to sell at home and abroad and, in doing so, create millions of well-paying jobs on both sides of the border. Our successes are reflected in all aspects of the partnership.

The Honourable François-Philippe Champagne, Minister of International Trade, will visit Cleveland, Ohio, from May 19 to 21, 2018, to further cultivate this long-standing cross-border trade relationship. The Minister will meet key leaders, including Frank G. Jackson, Mayor of Cleveland, and Loretta Mester, President and CEO of the Federal Reserve Bank of Cleveland.

While in Cleveland, Minister Champagne will address the Cleveland Council on World Affairs, highlighting how NAFTA has contributed to the global competitiveness of the North American economy. The Minister will also deliver the commencement address to the graduating class at Case Western Reserve University’s prestigious School of Law, where he will highlight  notable areas of cooperation between Canada and the United States.

Maintaining strong people-to-people ties between border cities and states is a testament to the enduring positive relationship Canada and the United States share. As well, the education sector has long benefited from students crossing the border to attend each other’s education institutions. As a respected alumnus and long-standing patron of Case Western Reserve University, Minister Champagne will also be presented with an honorary doctorate from the School of Law during his visit.

Minister Champagne will also meet with officials of the United States Coast Guard and visit the NASA Glenn Research Center to discuss closer cooperation in trade, transportation, safety and innovation.

Quotes

“As long-standing partners and strong allies, Canada and the United States have grown prosperous together, with the State of Ohio playing a big role in our close trading relationship. NAFTA is a powerful example of the benefits of ongoing cooperation between our two countries.”

- François-Philippe Champagne, Minister of International Trade

Quick facts

• NAFTA is the largest economic partnership in the world, with a regional market of 480 million consumers and a combined GDP of US$21 trillion.
• Canada and the United States share the world’s longest secure border, over which approximately 400,000 people, and goods and services worth US$1.7 billion, cross daily.
• Canada and the United States share one of the largest trading relationships in the world. Canada imported US$283 billion worth of U.S. goods in 2017—more than China, Japan and the United Kingdom combined.
• Millions of good, middle-class jobs on both sides of the border depend on the partnership. Nearly 9 million U.S. jobs depend on Canadian trade and investment.
• Ohio exports US$18.9 billion in goods and US$1.1 billion in services to Canada annually, while Canada exports US$12.2 billion in goods to Ohio each year.
• Canada is the number one market for Ohio-made goods. Ohio sells more goods to Canada than to its next seven largest foreign markets combined.
• Canada is a significant source of investment for Ohio. The 291 Canadian-owned companies operating in Ohio provide over 25,000 jobs, with an average annual wage of US$45,930.
• In total, 308,700 jobs in Ohio depend on trade and investment with Canada.

FULL DOCUMENT: https://www.canada.ca/en/global-affairs/news/2018/05/minister-of-international-trade-to-visit-ohio-to-highlight-strong-canada-united-states-trade-relations.html

The Globe and Mail. 17 May 2018. Canada, Mexico push U.S. for compromise as NAFTA deadline looms. NAFTA: Talks effectively on hold as U.S. sorts out House deadline
ADRIAN MORROW, WASHINGTON
GREG KEENAN, TORONTO

The renegotiation of NAFTA is set to miss a key congressional deadline for a deal, as the three countries remain at loggerheads over nearly every major issue and barely any serious talks have taken place in recent days.

Canada and Mexico are pressuring the Trump administration for concessions, signalling the United States can have the quick deal it wants – but only if it is willing to drop or compromise on its most contentious demands.

One scenario under serious consideration is a socalled “skinny” deal: Mexico and Canada would agree to U.S. demands for tougher content rules in the automotive sector in exchange for Washington leaving every other controversial section of the North American free-trade agreement untouched, said people familiar with the backroom strategizing.

Canadian officials on Wednesday said Ottawa is not responsible for holding up talks, contending that an agreement is achievable.

“There are all the elements there for a deal,” Kirsten Hillman, deputy Ambassador to the United States, told a NAFTA event hosted by The Hill newspaper at the Newseum in Washington.

“There is momentum now.” Ms. Hillman acknowledged that an autos-only deal is “a possibility.”

House Speaker Paul Ryan has said negotiations must conclude by Thursday to give Congress enough time to pass a revised NAFTA before the end of the year.

“We can’t work a bill unless we have an agreement that’s in writing that we can work on and that hasn’t occurred yet,” he said at the Capitol on Wednesday.

There were no meetings Wednesday between Foreign Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo, the ministers leading NAFTA negotiations, said one source with knowledge of their schedules.

Another source said there had been no negotiations of substance since Ms. Freeland, Mr. Lighthizer and Mr. Guajardo met last Friday in Washington. The source said talks were effectively on hold as the Trump administration tried to sort out what Mr. Ryan’s deadline will mean.

Canadian union leader Jerry Dias, who is receiving regular updates on the talks from Canadian officials, said he spent three hours in Ottawa on Tuesday with Canada’s chief negotiator, Steve Verheul. The fact that Mr. Verheul had so much time on his hands indicates how little discussion is occurring between the three sides, Mr. Dias said.

“Even if Verheul hopped on a plane today to get down to Washington, then the most that can be accomplished by tomorrow is symbolism at best,” said Mr. Dias, president of Unifor.

At the heart of the talks are U.S. demands for tougher “rules of origin” on auto manufacturing. Under the American proposal, 75 per cent of all parts used in North American-made vehicles would have to come from the NAFTA zone. Auto makers would also be obliged to source 70 per cent of their steel, aluminium and glass from North America, and ensure 40 per cent to 45 per cent of components were made in factories where workers were paid at least US$15 to US$17 an hour – a move meant to move jobs from Mexico to the United States.

Mexico has offered to accept a lower content threshold of 70 per cent, plus laxer rules that would allow auto companies to choose between using more North American steel and sourcing parts from factories with higher wages. In exchange, Mexico has demanded that the United States drop contentious proposals on other parts of the deal, sources briefed on the Mexican position said.

The Trump administration’s other demands include tough new “Buy American” rules for government contracts, the abolition of dispute-settlement mechanisms, a sunset clause that would kill the deal in five years unless all three countries agreed to keep it and the end of Canada’s protectionist tariff system for dairy products.

Prime Minister Justin Trudeau delivered a similar message to the Mexicans when he spoke with President Donald Trump by phone earlier this week, Mr. Guajardo said. The Prime Minister told the President that the United States could have a deal “at any time,” so long as there was “flexibility from the parties” at the bargaining table, Mr. Guajardo said in a Mexican television appearance on Tuesday.

Daniel Ujczo, an Ohio-based lawyer who specializes in Canada-U.S. trade, said he believed Mr. Trump would ultimately agree to an autos-focused deal and set aside other tough proposals.

“POTUS [President of the United States] the deal maker is coming in his closer role and trying to wrap up a ‘skinny’ version of the NAFTA,” Mr. Ujczo said.

The three countries are renegotiating the pact at the behest of Mr. Trump, who won election in part by pledging to bring manufacturing jobs back to the United States. Concluding a deal on autos could give him a boost ahead of tough November congressional elections.

Brett House, deputy chief economist at Bank of Nova Scotia, said given that it typically takes years to negotiate a trade agreement, the current pace of NAFTA talks is actually fairly swift. Negotiations began last August.

And Mr. House said missing Mr. Ryan’s deadline may not be much of a problem from Canada’s perspective: Despite fears that uncertainty over NAFTA is causing problems for business, Mr. House said the public data so far do not conclusively show much negative effect on Canada’s economy.

“We’d probably like to have it over and done with,” he said. “But not at any cost.”

The Globe and Mail. MAY 17, 2018. NAFTA: It’s deadline day, so what happens now?
ADRIAN MORROW, WASHINGTON

When he rode into office promising a total overhaul of the North American free-trade agreement, U.S. President Donald Trump vowed to finish renegotiations within months.

Mr. Trump’s trade chief, Robert Lighthizer, set a deadline of December, 2017. Last fall, he changed it to March, 2018. In March, he pushed it to late April. Last week, House of Representatives Speaker Paul Ryan set May 17 as the last possible day for a deal that could be approved by Congress before the end of the year.

On Thursday, Mr. Ryan’s deadline arrived with no conclusion to NAFTA talks in sight. None of the most contentious demands have been resolved at the bargaining table.

Now, negotiations look set to drag on into 2019, leaving the deal that governs over $1-trillion in continental trade up in the air.

Some officials have floated the possibility of a so-called “skinny” deal, which would cover only the automotive sector – the Trump administration’s priority in the talks – and a handful of uncontroversial issues, while leaving all other contentious areas in the pact untouched.

Others, however, warn that such a limited agreement would look like a defeat for Mr. Trump and would fail to pass the U.S. Congress – leaving him no choice but to dig in for the long term.

The President could also ignore Congress altogether and try to implement a renegotiated deal by executive order. Such a move would be risky, however, likely setting up a showdown with Congress.

Here is what you need to know about the state of play in NAFTA talks, what Thursday’s deadline means, and what happens next.

Why are we renegotiating NAFTA, again?

Mr. Trump argues the pact, which came into effect in 1994, allows Canada and Mexico to “take advantage” of the U.S. In particular, he blames NAFTA for the loss of American factory jobs. This message helped him win the 2016 election by taking rust-belt votes in Ohio, Michigan and Pennsylvania.

Canada and Mexico could theoretically have refused to renegotiate NAFTA, but Mr. Trump threatened to pull the U.S. out of the deal. Also, the Canadian and Mexican governments saw this as an opportunity to make some less controversial updates to the 24-year-old agreement, such as adding rules covering the digital economy.

Why is there a congressional deadline?

Under U.S. trade law, Congress delegates the ability to negotiate trade deals to the President, subject to a series of procedural timelines. These include a 180-day period for the U.S. International Trade Commission to review and report on a negotiated deal before it is submitted to Congress for approval.

Because of those timelines, plus other business on the congressional calendar and midterm elections in November, Mr. Ryan said he needed to see a deal by May 17 for Congress to have enough time to vote on it by the end of the year.

Further complicating matters, the Trump administration is already in a standoff with its own Republican congressional caucus over one of the most contentious pieces of NAFTA: Mr. Lighthizer wants to pull the U.S. out of the Chapter 11 system that allows companies to sue governments at special trade panels.

Mr. Lighthizer argues that the Chapter 11 panels impinge on national sovereignty and encourage U.S. companies to do business in Mexico by allowing them to bypass the local court system when they get into a fight with Mexican authorities. Most other Republicans, however, want businesses to have this protection.

Why does anyone care about this deadline?

For one, a new Congress will take office at the start of 2019 and could set out new priorities for trade talks. Incorporating those into NAFTA bargaining, on top of what has already been negotiated, could take even more time.

Also, Mr. Trump would like to conclude talks for political reasons: Renegotiating NAFTA was a major campaign promise, and the sooner he can complete it, the better he can argue he is implementing his agenda.

What is deadlocked at the bargaining table?

Currently, the toughest sticking point is a U.S. demand that 40 to 45 per cent of the parts in North American-made vehicles come from factories where workers earn at least US$15 to $17 an hour. This is designed to push auto jobs away from Mexico, where workers make closer to US$4 an hour. Mexico, not surprisingly, is fighting this proposal.

The wage requirement is one of a long list of changes to the “rules of origin” governing auto content the U.S. wants to impose, in a bid to move factory jobs back to North America. Other rule changes the U.S. wants include requiring auto makers to use at least 70-per-cent North American-made steel, glass and aluminum in their vehicles.

There are several other contentious U.S. demands that are also at an impasse, including:

• A Buy American procurement rule that would severely limit the amount of U.S. government contracting Canadian and Mexican firms could bid on.
• A sunset clause that would automatically terminate NAFTA in five years unless all three countries agreed to keep it.
• Abolishing the Chapter 19 dispute resolution system, which Canada has successfully used to challenge U.S. tariffs on softwood lumber, and making a different dispute settlement provision, Chapter 20, non-binding.
• Abolishing Canada’s protectionist supply management system, which fixes prices for milk, eggs and poultry, in part by slapping tariffs on foreign imports.

What happens now?

One option is to try to reach a “skinny” deal, which would see an agreement on new auto-sector content rules in exchange for the U.S. dropping all of its other contentious demands – and effectively leaving those areas of NAFTA unchanged. Mexico has proposed something along these lines, said sources with knowledge of the discussions, but has so far met a cool response from the U.S.

The advantage of a “skinny” agreement is that – if it were reached quickly enough – there is a slight chance it could still get through the procedural timelines and be submitted to Congress this year.

The disadvantage, however, is that a deal focused only on autos would exclude some of the things Congress has listed as priorities in trade talks, such as prying open Canada’s dairy market. Leaving those parts of the deal unchanged could make it harder for Mr. Trump to secure congressional approval.

Also, it could hurt Mr. Trump if, after all of his promises about overhauling the deal, he came back with major changes in just one area of the pact.

The other scenario is for the three countries to simply keep negotiating as they have been before. This is what Canada has signalled it is prepared to do. It could ultimately make for a long, arduous stretch of talks, extending into next year.

Another possibility is that Mr. Trump tries to bypass Congress and implement any NAFTA deal with Canada and Mexico by executive order. There is some precedent for changes to NAFTA – particularly in the rules of origin – that do not have to go through Congress. But making any substantial changes without a vote is certain to anger legislators and could lead to a court battle.

Are there other deadlines that matter now?

When Mr. Trump brought in tariffs of 25 per cent on imported steel and 10 per cent on aluminum earlier this year, he gave Canada and Mexico a temporary pass. Getting a permanent exemption, he said, was dependent on a NAFTA deal.

The current exemptions run out on June 1, and the White House has previously said there would be no more temporary exclusions. So, in theory, Canada and Mexico will be slammed with steel and aluminum tariffs if NAFTA talks aren’t finished by the end of this month. Given that the U.S. is Canada’s largest customer for both of the metals – and that Canada is heavily integrated into the supply chains of American manufacturers – such tariffs would be painful for both Canadian and American companies.

Also, Mexico holds a presidential election on July 1, with the winner taking office in December.

The front-running Mexican presidential candidate, Andres Manuel Lopez Obrador, has vowed to put his own negotiating team in place if NAFTA talks are still going on after he takes power. This could add another wrinkle.

Could Trump still tear up NAFTA if he thinks negotiations are taking too long?

The President’s threats to pull out of the deal have become less frequent in recent months, but it’s still theoretically a possibility.

Under NAFTA’s Article 2205, any country can quit the deal after six months’ notice.

However, Congress – and particularly free-trade Republicans who are often more aligned with Canada and Mexico in the talks than with their own President – would be likely to argue the President cannot pull the U.S. out without their approval. This would set the stage for a further legal battle.

In short, we could be hearing about NAFTA for a very long time to come.

The Globe and Mail. Explainer. NAFTA’s saga so far: A guide to trade, the talks and Trump (contains history and chronology)

FULL DOCUMENT: https://www.theglobeandmail.com/politics/article-nafta-explainer-trump-canada-mexico-trudeau/

REUTERS. MAY 17, 2018. Mexico says no date set for next NAFTA ministerial meeting

MEXICO CITY (Reuters) - Mexico’s Economy Minister Ildefonso Guajardo said on Thursday that there is no date set for the next North American Free Trade Agreement (NAFTA) ministerial meeting, but added that his technical negotiating team was in Washington.

Guajardo said that he could not rule out that talks with the United States and Canada to rework the trade accord continue after Mexico’s July 1 presidential election.

Reporting by Sharay Angulo

INTERNATIONAL TRADE

US. CHINA. The Globe and Mail. REUTERS. MAY 17, 2018. U.S. and China launch more trade talks to avoid a damaging tariff war
DAVID LAWDER, WASHINGTON

The United States and China launch a second round of trade talks on Thursday to try to avert a damaging tariff war, with the Trump administration demanding a $200 billion cut in China’s U.S. trade surplus and greater protections for intellectual property.

U.S. President Donald Trump has threatened to impose up to $150 billion in punitive tariffs to combat what he says is Beijing’s misappropriation of U.S. technology through joint venture requirements and other policies. Beijing has threatened equal retaliation, including tariffs on some of its largest U.S. imports, including aircraft, soybeans and autos.

At talks in Beijing two weeks ago, both sides presented lengthy lists of demands, agreeing only to keep talking.

The Trump administration sought a $200 billion reduction in China’s $375 billion U.S. goods trade surplus, an end to joint venture requirements that it says coerce technology transfers from American companies and an end to subsidies for advanced technology industries under the “Made in China” 2025 program.

China demanded that Trump relax crushing restrictions imposed on Chinese telecommunications equipment maker ZTE Corp, and end restrictions on Chinese investments in the United States and sales of high-technology goods to China.

Trump on Sunday wrote on Twitter he would help put ZTE back in business after a Commerce Department ban cut off its supply of U.S. components, forcing it to suspend operations.

In tweets on Wednesday, Trump linked ZTE’s situation to a larger trade deal and said that Beijing has “much to give” Washington on trade, denying suggestions his administration was “folding” in negotiations with China.

“Nothing has happened with ZTE except as it pertains to the larger trade deal,” Trump wrote on Twitter.

Top White House economic adviser Larry Kudlow told Fox Business Network on Thursday the discussion over ZTE was about re-examining the U.S. penalties, not waiving the enforcement action altogether.

“We have not seen China’s demands yet, which should be few in that previous U.S. Administrations have done so poorly in negotiating,” Trump wrote. “The U.S. has very little to give, because it has given so much over the years. China has much to give!”

CHINA PROPOSAL, TRUMP TEAM RIFT

Kudlow, in his interview with Fox, said the White House expected China to bring a proposal to the talks that would “extend the conversation and permit additional negotiations.”

The discussions get under way with some drama as the White House’s harshest China critic, Trump trade adviser Peter Navarro, was relegated to a supporting role amid a growing rift with U.S. Treasury Secretary Steven Mnuchin.

Navarro will be present at the meetings, but the White House said they would be led by Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer. The Chinese side will be led by Vice Premier Liu He, the top economic adviser to Chinese President Xi Jinping.

Navarro, author of the book “Death by China,” has been a major advocate of punitive tariffs on Chinese goods.

He attended the initial talks in Beijing but had an angry exchange with Mnuchin on the trip, a person familiar with the episode said.

The Washington talks will start as the U.S. trade representative finishes up public hearings on the first batch of U.S. tariffs on $50 billion worth of Chinese goods proposed as punishment for alleged violations of U.S. intellectual rights.

The tariffs, which target Chinese electrical and machinery parts, autos and flat-screen television sets, could take effect in early June, and may be followed by an additional round targeting $100 billion worth of goods yet to be identified.

LIU PLEDGES HARD WORK

Liu started his visit in Washington by meeting with trade-focused U.S. lawmakers on Wednesday, listening to their concerns and telling them he would work hard to address problems in the U.S. trade relationship.

Lawmakers said they told Liu he needed to address U.S. concerns about intellectual property theft, forced technology transfers, barriers to investment in China and U.S. agricultural exports.

“He recognizes there are problems in this trade relationship,” said Republican Representative Kevin Brady, chairman of the House of Representatives’ Ways and Means Committee. “And his hope for this trip was to begin to address the trade imbalance, increasing demand of Chinese consumers for U.S. products, as well as to begin to take steps on the structural reforms.”

REUTERS. MAY 16, 2018. China does not want to see escalation in Sino-U.S. trade tension

BEIJING (Reuters) - China does not want to see escalation in Sino-U.S. trade tensions, its commerce ministry said on Thursday, expressing hope that the two sides could minimize conflict during talks being held in the United States.

China hopes the U.S. will take action as soon as possible on the case of Chinese technology company ZTE and resolve it in a fair manner, ministry spokesman Gao Feng told reporters at a regular briefing.

U.S. President Donald Trump pledged on Sunday to help ZTE Corp “get back into business, fast” after a U.S. ban crippled it, offering a job-saving concession to Beijing ahead of this week’s talks.

Reporting by Yawen Chen and Beijing Monitoring Desk; Editing by Clarence Fernandez

EDC. May 17, 2018. The ‘D’ Word is Back in the Export Lingo. Time to join the Canadian exporters having the ride of their lives.
Peter Hall, Vice-President and Chief Economist

When a particular basket is doing well, we can’t resist putting our eggs into it. Maybe a large share, or maybe all of them. And when that basket inevitably goes south, we stare in disbelief at the short-sightedness of our singular commitment. It happens over and over again; it seems we only think of diversification after the fact. So, with uncertainty shrouding Canada’s key trading relationship, is the ‘D’ word back in export-speak?

D is for Diversification

In one very great respect, we could say that it never really left the lingo. Back in 2000, Canada’s exports to China were duking it out with Germany for 4th place in the overall rankings, well behind our dominant sales to the US, but also well behind Japan and the UK. But back then, China accounted for barely one per cent of Canada’s international shipments. A solid track record in the Chinese market has now vaulted Canada’s export sales there to second place among all export destinations, with a comfortable lead on the third-ranking UK and fourth-placed Japan. It’s a well-known story, but worth repeating. China’s share of Canada’s total merchandise exports has not only jumped up to 4.5 per cent, but it continues to rise.

But it is still just 4.5 per cent, paling in comparison to the dominant US market. One look, and many quickly lose a lot of interest; while impressive, it still seems too small to get too excited about. Given the risks and potential losses feared by a venture into China, or the sheer cost of exploring and building business there, many Canadian exporters opt out. However, that decision usually ignores the fact that Canadian export sales to the US grew on average by 0.7 per cent each year since 2000, while those doing business in China averaged 12 per cent – every year. Some industries did a multiple of that. Well, that’s now a whole different story, and raises interesting questions.

Try this one out for size: if this growth wedge remained the same over the forecast horizon, how would that trade share change? That’s a great question. The answer? It would take just over a quarter of a century, but at that point we would be shipping as much Canadian stuff to China as to the US. It hardly seems possible, but the math is pretty simple.

How soon could China be #1?

Now, some will rightly challenge the assumptions: in the middle of the 2000-2017 timeframe, we had a massive global recession that affected US sales a lot more than our exports to China. Fair enough, let’s then go with a more reasonable growth trend. The wedge between growth in our US and Chinese exports is narrower, but still significant. Under this scenario, it would take about twice the time for China to become Canada’s top overall export destination. Either way, it’s a pretty staggering change in a relatively short timeframe, and strongly suggests that every Canadian exporter should have a China strategy.

Is ‘every’ a bit rich? Well. Let’s dive a bit deeper. Drawing again on the 17-year growth trend, Canada’s wood products industry has just over 7 years before China is top customer. For refined metals net of aluminium, it’s 12 years. For processed meats, just above 12 years, and for seafood, 16 years. Moving a bit up the value chain, navigation, measuring, medical and control instruments have 23 years until China is the dominant destination, and autos – yes, that most US-centric of our industries – just over 11 years. Now in the latter case, and in that case only, growth is absurdly high, and from a very low base, so it is the only one on this list that is very unlikely to be realized. Still, it’s useful as an illustration that in even our most US-focused businesses, there is a big shift in activity underway, and one that exporters of all stripes ignore at their own peril.

Canada’s trade heat-map is changing

Angst about the future state of our trade with the US has launched the diversification word back into day-to-day trade conversations in a way I haven’t seen since the Great Recession. The China story is compelling, but when we consider that India is fast becoming a sort of ‘next’ China, and that there are other fast-growing emerging markets that we are increasing our trade with, as time goes on Canada’s trade heat map will undergo significant changes – if we broaden our focus.

The bottom line?

Diversification isn’t just talk; it’s happening, and with dramatic results. Time to join the Canadian exporters that are having the ride of their lives.

ENERGY

REUTERS. MAY 16, 2018. U.S. yields, dollar grind higher as oil tops $80 a barrel
Lewis Krauskopf

NEW YORK (Reuters) - Yields on benchmark U.S. bonds rose on Thursday to their highest level in about seven years, pushing the U.S. dollar to a four-month peak against the yen, while oil prices eclipsed $80 a barrel for the first time since November 2014.

U.S. and European shares gained modestly, with MSCI’s gauge of stocks across the globe edging up 0.18 percent.

European bond yields generally were also rising along with U.S. peers as investors eyed political risk in Italy.

The focus this week has centered on rising U.S. Treasury yields, as investors point to data reflecting a strong U.S. economy that could indicate firming inflation.

The benchmark 10-year U.S. yield hovered above 3.1 percent, continuing a surge higher earlier in the week.

“I think it’s the same thing we have had really for the past couple of weeks: The inflation trade is being put on,” said Walter Todd, chief investment officer at Greenwood Capital in Greenwood, South Carolina.

Looking at the rise in bond rates, the dollar and oil, Todd said, “all that is being driven by the same backdrop, which is the U.S. economy is hitting on all cylinders.”

On Wall Street, the Dow Jones Industrial Average rose 33.18 points, or 0.13 percent, to 24,802.11, the S&P 500 gained 6.21 points, or 0.23 percent, to 2,728.67 and the Nasdaq Composite added 17.62 points, or 0.24 percent, to 7,415.92.

Energy shares rose 1.3 percent, bolstered by higher oil prices.

Investors were also watching trade developments between the United States and China, as the two countries launched a second round of talks to try to avert a damaging tariff war.

The yield premium investors demand for holding Italian bonds over top-rated German peers jumped to its highest since January as investors fretted about a confrontation between a new government and the ECB over debt forgiveness.

Italian stocks edged higher after selling off on Wednesday after details of a draft coalition document showed plans to ask the European Central Bank to forgive 250 billion euros ($294.70 billion) in debt.

The pan-European FTSEurofirst 300 stock index rose 0.51 percent.

U.S. 10-year yields climbed following a steep bond market selloff earlier in the week.

Benchmark 10-year notes last fell 5/32 in price to yield 3.1112 percent, from 3.095 percent late on Wednesday.

The dollar index, which measures the greenback against a basket of major currencies, rose 0.09 percent. The Japanese yen weakened 0.37 percent versus the U.S. currency at 110.80 per dollar.

“The near-term picture remains positive for the dollar with Treasury yields showing few signs of topping, a move that makes the buck a more enticing bet to income-seekers,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

Oil prices hit $80 a barrel for the first time since November 2014 on concerns that Iranian exports could fall because of renewed U.S. sanctions, reducing supply in an already tightening market.

Brent was last at $80.29, up 1.27 percent on the day, after rising as high as $80.33.

U.S. crude rose 0.71 percent to $72.00 per barrel.

“The geopolitical noise and escalation fears are here to stay,” said Norbert Rücker, head of macro and commodity research at Swiss bank Julius Baer. “Supply concerns are top of mind after the United States left the Iran nuclear deal.”

Spot gold dropped 0.1 percent to $1,288.96 an ounce, touching a new low for the year during the session.

Additional reporting by Gertrude Chavez-Dreyfuss in New York, Marc Jones and Ron Bousso in London; Editing by Bernadette Baum

LABOUR MARKET

ADP-Canada. REUTERS. MAY 17, 2018. Canada adds 30,200 jobs in April: ADP

OTTAWA (Reuters) - Canada added 30,200 jobs in April, led by hiring in professional and business services, trade, and manufacturing, according to a report from ADP released on Thursday.

The report, which is jointly developed with Moody’s Analytics, is derived from ADP’s payrolls data of about 40,000 companies.

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LGCJ.: