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Trump-Xi call isn’t enough to resolve critical mineral shortage

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1 year ago

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Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019.

Aly Song | Reuters

BEIJING — A high-stakes call between the U.S. and Chinese presidents on Thursday has yet to resolve a global shortage of rare earth exports that businesses say could halt production of cars and other industrial parts this summer.

Rare earths, along with a broader group of critical minerals, are used in weapons, cars and other high-tech products. China has come to dominate the mining and production of those metals, and over the last two years has gradually started to restrict international sales.

In early April, China announced new export controls on seven rare earth elements. Unlike other measures, Beijing did not specify whether they were a response to heightened U.S. tensions.

After both sides reached their breakthrough trade agreement on May 12, China’s Commerce Ministry said on the same day that it held a meeting to strengthen export controls on critical minerals.  There was no broad rollback of the restrictions on seven rare earths.

This development came as a surprise to many in Washington, who had expected a repeal of the rare earths restrictions, since the trade agreement had said both countries would suspend most tariffs and roll back countermeasures for 90 days.

But so far, only some Chinese suppliers of U.S. companies have received six-month export licenses for rare earths, the American Chamber of Commerce in China said Friday, citing a survey of members from May 23 to 28.

Among respondents affected by rare earths controls, 75% said their existing supplies would run out within three months, the survey said. The controls mostly affected sectors involving research and development, resources, industrial and tech, but not consumer or services companies, the survey showed.

While China did not mention rare earths in its readout of Chinese President Xi Jinping’s call with U.S. President Donald Trump, the long-awaited conversation itself signaled that both countries would continue to talk, following accusations from both sides of violating the trade agreement.

U.S.-China truce talks are likely temporary, it will blow up, says AEI's Derek Scissors

“I think we’re in very good shape with China and the trade deal,” Trump told reporters following Thursday’s call. “We have a deal with China, as you know, but we were straightening out some of the points having to do mostly with rare earth magnets and some other things.”

He did not elaborate. But Trump said U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer would meet their Chinese counterparts at an unspecified time.

Further trade talks will likely bring the U.S. and China back to where things stood earlier this year, with limited tariffs, Jianwei Xu, senior economist at Natixis, said Friday. He said China could accelerate some rare earths export approvals for commercial use, in return for the U.S. easing its restrictions on some tech exports to China.

“I think both China and the U.S. have figured out that each other’s immediate weaknesses are not so much about tariffs, but more about non-tariff issues, especially in tech and rare earths,” Xu said.

Not just the U.S.

The impact of China’s restrictions on rare earths extends beyond U.S. companies.

Several European auto parts companies have already had to stop production, industry association CLEPA said Wednesday. It warned of more widespread impact in coming weeks, and said China has only approved about 25% of “hundreds of export license applications” that were submitted.

China has recently appeared to ease some export controls, albeit to some European companies, the European Union Chamber of Commerce in China said Friday. But it warned that it was insufficient to “prevent severe supply chain disruptions for many companies.”

“Our members are still struggling with the export licence approval process, due to both the time it takes and the lack of transparency, and this is now negatively impacting production lines in Europe and other countries,” European Chamber President Jens Eskelund said in a statement.

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Japanese automaker Suzuki Motor briefly suspended production of its Swift car due to China’s rare earth curbs, Reuters reported Thursday, citing two unnamed sources, with manufacturing expected to partially resume on June 13. A Suzuki Motor spokesperson was not immediately available to comment when contacted by CNBC.

“China’s export control measures are consistent with universal practices. Such measures are non-discriminatory and not targeted at any particular country,” China’s Foreign Ministry Spokesperson Lin Jian said in response to a question about the Japanese automaker on Thursday, according to an official English-language transcript.

That echoed Ministry of Commerce Spokesperson He Yongqiang’s response to a question last week on Chinese companies restricting sales of a critical mineral stored outside the country at the Netherlands’ Rotterdam port.

She added during a separate press conference Thursday that China would approve applications for export licenses in line with its regulations, and to “promote convenient and compliant trade.” That’s according to a CNBC translation of the Chinese.

Increasing export controls

China’s restrictions on critical minerals have accelerated in the last several months.

Following export controls in Aug. 2023 on gallium and germanium, two metals used in chipmaking, China, a year later, then announced similar restrictions on exports of antimony, which is used in bullets, nuclear weapons production and lead-acid batteries. It can also strengthen other metals.

A few months later, China released a broader policy that tightened restrictions on exports of products that could have both civilian and military use. The export controls cover metals such as tungsten that the U.S. has deemed critical.

Tungsten is nearly as hard as a diamond, and is used in weapons, semiconductors and industrial cutting machines. 

There are about 300 grams (10.6 ounces) of tungsten in the average car, the majority of which is lost even with recycling, said Martin Hotwagner, market analyst at Austria-based Steel & Metal Market Research. As supplies run low, he expects Western companies will likely run out of tungsten later this summer.

— CNBC’s Sam Meredith contributed to this report.

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Finance

Treasury Bond Volatility Forces Bessent to Double Debt Buyback Size as Yields Swing

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19 hours ago

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August 26, 2026

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Bessent

A turbulent week in the U.S. Treasury market prompted the Treasury Department to sharply increase the size of its long-term debt buyback program, as bond prices fell even while equity markets pushed toward record highs. The divergence has drawn attention from fixed-income strategists who see it as a signal of underlying investor unease about federal borrowing levels.

What Happened This Week

U.S. Treasury Secretary Scott Bessent told CNBC on Thursday, August 20, 2026, that the Treasury had doubled the size of its long-term debt buyback operations, moving from roughly $2 billion to at least $4 billion per operation. Bessent indicated the figure could climb further, saying “we’re going to increase the size of the buyback,” and noted the accelerated pace could exceed the announced $4 billion threshold per issue.

Buybacks allow the Treasury to repurchase outstanding government bonds directly from the market, which can help support prices and dampen yield volatility during periods of stress. The expanded program came as stocks staged a late-week recovery: the S&P 500 and Russell 2000 both advanced on Friday, August 21, even as Treasuries logged mild losses, according to Bloomberg market data.

Why Bond and Equity Markets Are Diverging

Capital.com senior market analyst Daniela Hathorn described the week’s dynamic as markets “ending the week on a softer tone after the relative calm of early August was disrupted by renewed pressure in global bond markets, another rise in oil prices, and growing uncertainty around the Federal Reserve’s next move.” She noted that higher long-term borrowing costs are increasingly challenging elevated equity valuations, even as U.S. equities pull back modestly from record highs.

This divergence — equities near record levels while bonds sell off  is unusual and reflects two different sets of investor concerns. Equity investors have remained focused on corporate earnings strength, particularly from large technology companies ahead of Nvidia’s closely watched August 26 earnings report. Bond investors, by contrast, are more directly exposed to concerns about the scale of federal borrowing, highlighted this week by the national debt crossing the $40 trillion threshold for the first time.

The Fed and Treasury “Working in Opposite Directions”

Wilmington Trust senior bond portfolio manager Wil Stith told Yahoo Finance that current conditions reflect “the Fed and the Treasury basically working in sort of opposite directions,” adding that the imbalance will likely require the Federal Reserve  which he described as having “the larger sandbox”  to adjust the federal funds rate rather than relying on Treasury market interventions alone to manage yields.

Notably, the bond market’s reaction to the Treasury’s buyback expansion was relatively muted; strategists described the move as being largely absorbed without a major rally, suggesting the underlying pressure on yields stems from factors, such as inflation persistence and debt sustainability concerns, that a buyback program alone cannot resolve.

What Comes Next

Markets are now looking to two major events in the days ahead: Nvidia’s earnings report on Wednesday, August 26, and the Federal Reserve’s Jackson Hole Economic Symposium, running August 27-29. This will be the first Jackson Hole gathering under new Fed Chair Kevin Warsh, whose public communication style and policy signals remain less established than his predecessors’, according to market commentary from Regards of Wall Street.

For investors, the key metrics to watch are the size and frequency of future Treasury buyback operations, movements in the 10-year Treasury yield, and any policy signals from Warsh’s keynote address. Continued yield volatility alongside record equity valuations would suggest the market imbalance identified this week has not yet been resolved.

 

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Finance

Cross-Border Settlement Innovation and Real-Time Payment Architecture

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2 weeks ago

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August 15, 2026

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The global banking system is undergoing a comprehensive modernization of cross-border payment infrastructure. Driven by real-time settlement networks, open banking APIs, and interoperable messaging standards, financial institutions and multinational corporations are eliminating multi-day delays and reducing transaction costs associated with legacy international wire transfers.

Transition to Real-Time Gross Settlement Networks
Historically, international business-to-business (B2B) payments relied on complex correspondent banking relationships involving intermediary fees and processing delays. In 2026, the widespread adoption of ISO 20022 messaging protocols alongside interconnected Real-Time Gross Settlement (RTGS) systems allows direct, end-to-end processing of cross-border transfers.

Commercial banks are providing corporate clients with continuous, 24/7 payment clearing capabilities. Real-time transaction confirmation and automated FX rate locking allow international businesses to settle cross-border trade obligations within minutes, significantly reducing counterparty risk.

Central Bank Digital Currency (CBDC) Interoperability
Wholesale Central Bank Digital Currency (CBDC) pilot initiatives are reaching operational maturity across several key financial centers. Collaborative multi-CBDC platforms enable participating central banks and commercial institutions to settle foreign exchange and international trade transactions directly on shared distributed ledgers.

These wholesale digital currency networks eliminate traditional clearinghouse delays and minimize foreign exchange slippage. Enterprise treasury departments benefit from enhanced liquidity management, as cross-border cash balances can be deployed and repatriated instantaneously.

Corporate Treasury Transformation
For enterprise treasurers, instant cross-border settlement transforms cash management strategies:
– Working Capital Optimization: Reduced transaction float allows companies to lower precautionary cash reserves and optimize short-term liquidity investments.
– Automated Reconciliation: Enriched data formats embedded in ISO 20022 payment messages streamline automated general ledger posting and invoice matching.
– Reduced Processing Overhead: Account-to-account (A2A) real-time clearing bypasses costly intermediary correspondent banking fees.

Strategic Financial Priorities
1. Upgrade Treasury Systems: Ensure internal core enterprise software supports real-time ISO 20022 payment messaging standards.
2. Leverage Instant Clearing Rails: Utilize direct payment networks to lower cross-border transaction fees and eliminate settlement delays.
3. Evaluate Multi-Currency Liquidity: Modernize liquidity management frameworks to capitalize on 24/7 real-time settlement capabilities.

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Finance

Private Credit Expansion and Regulatory Oversight in 2026 Capital Markets

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2 weeks ago

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August 9, 2026

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The global private credit market has solidified its role as a fundamental pillar of enterprise finance, expanding rapidly across middle-market lending, asset-backed finance, and infrastructure financing. As non-bank financial institutions capture a larger share of corporate debt origination, global regulatory bodies are increasing oversight to evaluate market transparency and systemic risk interconnections.

Growth Drivers in Direct Lending
Direct lending platforms have continued to attract substantial institutional allocations from pension funds, sovereign wealth entities, and insurance companies seeking attractive risk-adjusted yields. Private debt funds offer corporate borrowers customized financing structures, faster execution timelines, and confidentiality compared to syndicated loan markets.

In 2026, private credit managers are increasingly financing larger corporate transactions, providing multi-billion-dollar credit facilities for buyout deals and corporate restructurings. The flexibility of private debt contracts—featuring unitranche pricing and tailored covenant packages—has made direct lending the preferred capital source for middle-market enterprise sponsors.

Regulatory Scrutiny and Systemic Risk Assessment
The rapid growth of non-bank intermediation has drawn heightened scrutiny from financial regulators in North America and Europe. Because private debt agreements are negotiated privately without public exchange disclosures, central banks are evaluating potential vulnerabilities related to asset valuation consistency and fund liquidity profiles.

Regulatory agencies are introducing guidelines aimed at improving reporting standards for private investment vehicles managing institutional assets. Key focus areas include monitoring leverage ratios within private credit funds and evaluating indirect credit exposures between commercial banking institutions and private debt funds.

Navigating Elevated Refinancing Costs
With benchmark interest rates remaining elevated, private debt borrowers face higher debt service obligations on floating-rate credit facilities. Financial advisory firms report an increase in proactive liability management strategies, including payment-in-kind (PIK) interest options, equity infusions from sponsors, and covenant modifications.

Private credit managers with deep operational capabilities are actively working alongside portfolio companies to optimize working capital and maintain cash flow coverage ratios during periods of higher borrowing costs.

Key Financial Takeaways
1. Mainstream Asset Class: Private credit has expanded beyond niche alternative asset status into a core corporate finance solution.
2. Enhanced Transparency Standards: Regulatory frameworks are evolving toward greater disclosure requirements for private debt managers.
3. Proactive Risk Management: Lenders and sponsors must prioritize debt sustainability and active portfolio monitoring amid high benchmark rates.

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