By Kanishka Singh

WASHINGTON (Reuters) -The office of U.S. Trade Representative Katherine Tai on Wednesday further extended China "Section 301" tariff exclusions on 352 Chinese import and 77 COVID-19-related categories till Dec. 31 that were set to expire on Sept. 30.

THE TAKE

The import tariff exclusions include industrial components such as pumps and electric motors, some car parts and chemicals, bicycles and vacuum cleaners. The COVID-related exclusions include medical products like face masks, examination gloves and hand sanitizing wipes.

WHAT'S NEXT

The extension until Dec. 31, 2023, will allow for further consideration under a statutory four-year review, Tai's office said in a statement on Wednesday.

U.S. Commerce Secretary Gina Raimondo said on Tuesday she does not expect any revisions to U.S. tariffs on China until the U.S. trade representative's office completes the review.

CONTEXT

* Former U.S. President Donald Trump imposed tariffs in 2018 and 2019 on thousands of imports from China valued at some $370 billion at the time, after a "Section 301" investigation found that China was misappropriating U.S. intellectual property and coercing U.S. companies to transfer sensitive technology to do business.

* The duties currently range from 7.5% on many consumer goods to 25% on vehicles, industrial components, semiconductors and other electronics. Among the major categories that escaped tariffs were cellphones, laptop computers and videogame consoles.

* The Trump administration had used Section 301 of the Trade Act of 1974, a statute aimed at combating trade partners' unfair practices, to launch the China tariffs.

* China last week urged Chinese companies investing in the U.S. to be given "equal treatment" and called U.S. 301 tariffs on Chinese imports "discriminatory," when Raimondo visited Beijing.

* Tariffs are only one component of strains in U.S.-China relations off late. Other contentious issues include Taiwan, spying allegations, human rights and the origins of the COVID-19 pandemic.

(Reuters) - The growth in euro zone's gross domestic product (GDP) may come under pressure as corporates ease the pace of investments due to higher borrowing costs, HSBC economists said on Tuesday.

The global bank expects rising interest rates to shave off more than 1% of euro zone's GDP by 2025.

HSBC, however, forecast a "smaller impact" to the British economy as a large chunk of corporate debt is now accounted for by 'bounce back' loans - government-guaranteed programs to help struggling small businesses hit by COVID-19 era lockdowns - fixed at the rate of 2.5%.

A recession in Europe is "certainly possible," HSBC said. However, the corporate sector will not tip the euro zone economy into one, as "fairly healthy" balance sheets limit the risk of businesses going bust, it added.

"The impact has been delayed because, while debt costs are rising, firms are also earning more interest on their deposits which ballooned as a result of subsidies during the COVID-19 pandemic," said Chris Hare, the lead senior economist at HSBC.

HSBC points out that fast-growing lending rates matter more to European businesses than their U.S. counterparts, as bank loans make up the vast majority of European corporate debt compared to U.S. companies.

"But 'excess' deposits are waning and we see the bulk of the interest rate headwinds emerging over the rest of this year and next," Hare added.

The euro zone returned to growth in the second quarter of this year, with a greater than expected expansion after narrowly avoiding a technical recession around the turn of the year.

SINGAPORE (Reuters) - Economists have downgraded Singapore's 2023 growth forecasts and inflation expectations, according to a survey by the country's central bank published on Wednesday, with spillovers from an external growth slowdown cited as the top risk.

The median forecast of 22 economists surveyed by the Monetary Authority of Singapore (MAS) is for Singapore's economy to grow 1.0% this year, down from a forecast of 1.4% in June's survey.

Gross domestic product is projected to expand by 2.5% in 2024.

The median inflation forecast is for headline consumer prices to rise 4.7% this year, down from 5.0% predicted in June. The median forecast for MAS core inflation, which excludes private road transport and accommodation costs, is 4.1%, unchanged from the previous survey.

Both headline inflation and MAS core inflation are expected to ease in 2024, to 3.1% and 2.8% respectively.

The survey was conducted in mid-August, just days after the government slightly cut its economic outlook for 2023 after the country narrowly averted a recession in the second quarter, with weak global demand a key drag on its economy.

About 69% of survey respondents cited the impact of a slowdown in external growth as the downside risk to the domestic outlook.

Tighter global financial conditions and rising geopolitical tensions were cited by survey respondents as the main factors that could potentially weigh on financial market and lending conditions in Singapore.

None of the economists is expecting MAS to make any changes to monetary policy in its review next month.

Majority of the respondents expect corporate profitability to decline this year, while more than half see private residential property prices rising.

By Tetsushi Kajimoto

TOKYO (Reuters) - Japan's top currency diplomat Masato Kanda said on Wednesday that Japanese authorities won't rule out any options on currencies if speculative moves persist, a comment apparently warning against a sell-off in the yen.

It was the strongest warning since mid-August, when the Japanese currency slid past the key threshold of 145 per dollar. Since then, the authorities have stopped firing warning shorts, keeping traders guessing on Japan's intervention strategy.

Kanda, vice minister of finance for international affairs, was speaking to reporters after the dollar broke above 147 yen to edge closer to 148 yen overnight, this year's strongest ever against the Japanese currency.

The dollar has gained momentum on the view the Federal Reserve may raise rates one more time to cope with persistently solid inflation, while the Bank of Japan is expected to continue powerful easing to stoke demand-pull inflation driven by strong wage growth. Such policy diversion is behind the yen's weakness.

"We won't rule out any options if speculative moves persist," Kanda told reporters. "Needless to say, it's important for currency moves to reflect fundamentals."

Japanese core consumer prices, running at above 3% for more than a year has shown little signs of sustainable inflation accompanied by solid wage gains.

By Elida Moreno

PANAMA CITY (Reuters) - The Panama Canal's water levels have not recovered enough as the end of the rainy season approaches and limits on daily transit and vessel draft will stay in place for the rest of the year and throughout 2024, the waterway's authority said on Tuesday.

The restrictions, implemented earlier this year to conserve water amid prolonged drought, triggered a backlog of ships waiting to pass the key global waterway, which handles an estimated 5% of world trade, contributing to more expensive freight costs ahead of the approaching Christmas season.

The bottleneck at the canal connecting the Pacific and Atlantic Oceans has eased about 20% since last week, but waiting times to transit the waterway doubled last month from July in some vessel categories, while many ship owners have opted for alternate routes to avoid costly delivery delays.

The authority that manages the canal added in a statement that this week's ship traffic represents a "normal" level for this season.

It noted that a month before the end of its 2023 fiscal year, the canal's total vessel crossings already total nearly 800 more that what the canal authority's budget had forecast.

The additional vessel crossings, which contribute to a total of more than 13,000 transits so far during the fiscal year, show strong demand by vessel owners.

But insufficient rainfall continues to negatively impact the Gatun Lake, which feeds the canal, lowering its water level to 24.2 meters (79.7 feet), versus 26.6 meters (87.41 feet) for the month of September in recent years.

Each vessel passing through the 50-mile (80-km) trans-oceanic waterway uses some 51 million gallons (193 million litres) of water from the lake.

At the end of the rainy season in November, the lake's water level typically reaches some 27 meters (89 feet) and then drops to slightly below 26 meters (85 feet) after the dry season ends in April, according to the canal authority.

Experts have warned about maritime trade disruptions ahead of what is shaping up to be an even drier period next year. They argue that a potential early start to Panama's dry season and hotter-than-average temperatures could increase evaporation and result in near-record low water levels by April.

By Matt Tracy and Davide Barbuscia

(Reuters) - A post Labor-day rush of bond issuance by U.S. investment-grade-rated companies added renewed pressure on long-end U.S. Treasuries, as some investors switch to buying top-rated corporate debt offering higher yields than those on government bonds.

At least 21 investment-grade rated bond offerings are expected to price on Tuesday, according to International Financing Review (IFR) data.

Investors told Reuters they expect anywhere between $100 billion and $150 billion in new bond issuance this month.

The average yield on U.S. investment-grade bonds was 5.73% as of Monday, compared to 5.47% at the start of the year and 2.44% in January 2022 when the Fed began hiking rates to combat inflation, according to ICE BAML data.

"September tends to be a very heavy supply month, so people will sell Treasuries and existing credit to make room for new issuance," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities USA.

Ten-year Treasury bond yields were last about nine basis points above Friday's market closing, at 4.27% from 4.180%, and 30-year yields similarly climbed about 9 bps to 4.38% from 4.285% on Friday.

Long-term Treasury yields, which move inversely to prices, have surged for much of the past couple of months as investors priced in the possibility of interest rates remaining higher for longer than anticipated, as the U.S. economy has proved surprisingly resilient to higher rates.

Other factors have also contributed to the selloff, from higher government bond supply to rising concerns around U.S. debt sustainability, as highlighted by Fitch’s downgrade of U.S. debt last month.

Yields retrenched last week but started climbing again on Friday.

With the Federal Reserve largely expected to keep interest rates on hold at its next rate-setting meeting this month, the corporate bond supply was seen as a factor contributing to higher yields in the coming weeks.

"I don’t necessarily think (the Fed) has got any more rate moves or rate tightenings left," said Tom di Galoma, managing director and co-head of global rates trading at BTIG.

"For right now, it’s just all about supply, and I think that’s what’s pushing yields higher," he said.

September is typically the second-busiest month for U.S. debt issuance, according to credit research analysts at JPMorgan Chase (NYSE:JPM), with an average issuance volume of $129 billion over the past four years outside 2020.

Among Tuesday's announced deals were a two-part senior unsecured note offering from Unilever (LON:ULVR) Capital Corp, three-part senior notes from tobacco company Philip Morris International (NYSE:PM) and a five-part note offering from automaker Volkswagen (ETR:VOWG_p).

NEW DELHI (Reuters) -Leaders of the world's richest and most powerful countries will attend the two-day G20 Summit in India's capital New Delhi starting September 9.

This is the first time India will host such a powerful group of world leaders. The capital has been adorned with ornamental flowers and fountains at traffic roundabouts while public buildings and sidewalks have been given a fresh coat of paint.

Security is being provided by anti-drone systems, cutouts of langurs to scare away monkeys and 130,000 police and para-military personnel.

WHAT IS THE G20?

The world's 20 major countries formed an economic grouping after the Asian financial crisis in 1999 with the understanding that such crises could no longer be contained within a nation's borders and required better international economic cooperation.

The bloc currently accounts for 80% of global gross domestic production (GDP) and 75% of international trade.

Its members include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, the United States and the European Union.

Although only treasury chiefs met in the initial years, heads of all member nations decided to meet once a year for a leaders' summit post the 2008 financial crisis.

WHAT ARE THE KEY ISSUES THIS YEAR?

Under India's year-long presidency, the bloc has centred discussions around more loans to developing nations from multilateral institutions, reforming international debt architecture, regulations on cryptocurrency and the impact of geopolitical uncertainties on food and energy security.

So far this year, the bloc has failed to issue any joint statements as it is deeply divided over language referring to the war in Ukraine.

While Russia and China are against blaming Moscow for the war in Ukraine, Western countries including the United States, France and Canada have sought a strong condemnation as a necessary condition for a joint statement.

SUMMIT THEME

India's G20 theme is derived from the Sanskrit phrase "Vasudhaiva Kutumbakam" which translates to “The World is One Family".

WHEN AND WHERE IS THE NEXT MEETING

India will hand over the presidency to Brazil on December 1.

(Reuters) - Goldman Sachs on Tuesday lowered its probability that a U.S recession would start in the next 12 months to 15% from an earlier 20% forecast.

The continued positive inflation and labor market data led to the cut, Goldman Sachs Chief Economist Jan Hatzius wrote in a note.

The investment bank said it expected reacceleration in real disposable income next year on the back of continued solid job growth and rising real wages.

It also noted the drag from monetary policy tightening will continue to diminish before "vanishing entirely" by early 2024.

U.S. consumer spending accelerated in July, but slowing inflation strengthened expectations that the Federal Reserve would keep interest rates unchanged in its policy meeting this month.

GS said it believed that Fed Chair Jerome Powell's "proceed carefully" approach signals that a September hike is "off the table" and the hurdle for a November hike is "significant".

Goldman added that it expected "very gradual" cuts of 25 basis points per quarter starting in second quarter of 2024.

BANGKOK (Reuters) -Thailand's central bank chief said on Tuesday that this year's economic growth and inflation were expected to be lower than previously forecast.

Last month, Bank of Thailand Governor Sethaput Suthiwartnarueput had said 2023 growth could come below the central bank's 3.6% forecast and a revised figure would be published in September. Last year's growth was 2.6%.

Inflation would gradually return to within target range, he said. A Reuters poll expects a rise of 0.61% for August. Data is due out later on Tuesday.

The current policy interest rate was close to a neutral level, Sethaput said. On Aug. 2, the central bank raised its key interest rate for a seventh straight meeting to 2.25%. It will next review monetary policy on Sept. 27.

"A neutral rate means it helps inflation stay in a sustainable range, and GDP grow at its potential of 3-4% without creating financial imbalances," he said.

The BOT has hiked the key rate by 175 basis points since August last year to curb price pressures.

Overall, the Southeast Asian country's economic recovery remains intact, Sethaput said, adding that 29 million foreign arrivals are still expected throughout the year.

Tourism remains a key driver, accounting for about 12% of GDP before the pandemic.

Speaking virtually at a Fitch economic seminar, he said second-quarter GDP was disappointing.

Thailand's economy grew 1.8% in the April-June period on the year and 0.2% on the quarter, sharply slowing from the previous quarter's 2.6% and 1.7%, respectively, as exports slumped.

TOKYO (Reuters) - Japanese household spending suffered its biggest drop in nearly 2-1/2 years squeezed by rising prices, although volatility in some items meant the outlook might not be as gloomy as the headline figures suggested.

Japan's economy grew much faster than expected in the second quarter, helped by the end of COVID-19 curbs and a resurgence in inbound tourism, and analysts expect private consumption to support overall growth amid weakness in global demand.

The household spending fell 5.0% in July from a year earlier, official data showed on Tuesday, sliding for five consecutive months and more than the median market forecast for a 2.5% decline.

On a seasonally adjusted month-on-month basis, household spending was down 2.7%, versus an estimated 0.5% gain.

Spending on dining out, transportation, culture and entertainment services increased with an uptick of the number of people who went out, but there were declines in a wide range of areas such as food and housing, an official at the Ministry of Internal Affairs and Communications said.

"The impact of price hikes has been felt to some extent," the official said, though he noted that the 5.0% drop included items that fluctuate widely such as housing and automobile purchase.

Japan's core consumer price index, which includes oil products but excludes volatile fresh food prices, rose 3.1% in August followed by a 3.3% increase the previous month. It held above the Bank Of Japan's 2% inflation target for the 16th straight month.

On the whole, private consumption will continue to recover as economic activity normalises and the decline in real wages is expected to narrow, said Masato Koike, economist at Sompo Institute Plus.

"Rising wages and the normalization of economic activity will lead to a recovery in consumption," Koike said.

That view was supported by a private survey showing Japan's service sector activity expanded at its quickest pace in three months in August, underpinned by robust consumer spending as inbound tourism regained momentum.

To view the data on the website of the Ministry of Internal Affairs and Communications, click here: