US Floats China Trade Truce Extension; Judge Pauses Layoffs | Bloomberg Daybreak

US-China Trade Relations

• 🇺🇸 Treasury Secretary Scott Bessent proposed extending the pause on tariffs on Chinese goods in exchange for China halting its plan to tighten limits on rare earth elements.
• 🤝 Bessent indicated a strong possibility of traveling to Asia to meet with Chinese Vice Premier Hali Fang to negotiate these terms.
• 🇨🇳 Sources reveal that Chinese hackers have accessed classified UK computer systems, including private communications and policy documents, for over a decade, fueling a debate on designating China a national security threat.
• 🍎 Global CEOs, including Apple's Tim Cook, are expected to meet with China's top trade negotiator, Hud Fang, amidst calls for a unified response to China's rare earth curbs.

US Government and Legal Developments

• ⚖️ A federal judge in San Francisco issued a temporary restraining order, blocking the Trump administration's planned layoffs of federal workers, deeming the move potentially "illegal and in excess of authority."
• 🏛️ The ruling affects more than 30 federal agencies and prevents new layoff notices for programs involving unionized workers, with approximately 4,100 employees having already received pink slips.
• 🇻🇪 President Trump confirmed authorizing covert CIA action in Venezuela, citing drug trafficking and the release of prisoners into the US as primary reasons for the operation.
• ⚖️ The US Court of Appeals for the Federal Circuit ruled that the International Emergency Economic Powers Act does not authorize the sweeping array of tariffs imposed by the Trump administration, a decision the President may appeal to the Supreme Court.

Economic and Market Trends

• 📈 Traders are increasing bets on a half-point Federal Reserve rate reduction, influenced by the prolonged government shutdown delaying key economic data and renewed US-China trade tensions.
• 🚀 Global stocks are rising, with strong tech earnings shifting focus away from trade threats, and analysts remain bullish on the tech sector, noting its current earnings power differs from past bubbles.
• 💡 Taiwan Semiconductor Manufacturing (TSMC) has raised its 2025 revenue growth projection to the mid-30% range, underscoring its role as a beneficiary of the AI infrastructure spending boom.
• 💰 Nestle announced plans to cut 16,000 jobs following a stronger-than-expected increase in quarterly sales.

Infrastructure and Political News

• 🚇 President Trump announced the termination of the $16 billion Gateway rail tunnel project under the Hudson River, linking New York City and New Jersey, a move criticized by Senator Schumer as "vindictive and reckless."
• 🇮🇱 Israel threatened to resume attacks on Gaza if Hamas does not fully comply with President Trump's peace plan regarding hostage returns.
• 🎤 The top three candidates for New York City's mayoral race are set to debate, with candidates aiming to differentiate themselves on policy and political ideology.