Every Thursday, Freddie Mac, a government-sponsored buyer of mortgage loans, publishes a weekly average of 30-year mortgage rates. Last week’s reading edged 4 basis points lower to 6.85%. Last September, the average sank as far as 6.08%. But back in October 2023, Freddie Mac’s average saw a historic rise, surging to a 23-year peak of 7.79%.
Freddie Mac’s average differs from what we report for 30-year rates because Freddie Mac calculates a weekly average that blends five previous days of rates. In contrast, our Investopedia 30-year average is a daily reading, offering a more precise and timely indicator of rate movement. In addition, the criteria for included loans (e.g., amount of down payment, credit score, inclusion of discount points) varies between Freddie Mac’s methodology and our own.
Calculate monthly payments for different loan scenarios with our Mortgage Calculator.
Important
The rates we publish won’t compare directly with teaser rates you see advertised online since those rates are cherry-picked as the most attractive vs. the averages you see here. Teaser rates may involve paying points in advance or may be based on a hypothetical borrower with an ultra-high credit score or for a smaller-than-typical loan. The rate you ultimately secure will be based on factors like your credit score, income, and more, so it can vary from the averages you see here.
What Causes Mortgage Rates to Rise or Fall?
Mortgage rates are determined by a complex interaction of macroeconomic and industry factors, such as:
The level and direction of the bond market, especially 10-year Treasury yields
The Federal Reserve’s current monetary policy, especially as it relates to bond buying and funding government-backed mortgages
Competition between mortgage lenders and across loan types
Because any number of these can cause fluctuations simultaneously, it’s generally difficult to attribute the change to any one factor.
Macroeconomic factors kept the mortgage market relatively low for much of 2021. In particular, the Federal Reserve had been buying billions of dollars of bonds in response to the pandemic’s economic pressures. This bond-buying policy is a major influencer of mortgage rates.
But starting in November 2021, the Fed began tapering its bond purchases downward, making sizable reductions each month until reaching net zero in March 2022.
Between that time and July 2023, the Fed aggressively raised the federal funds rate to fight decades-high inflation. While the fed funds rate can influence mortgage rates, it doesn’t directly do so. In fact, the fed funds rate and mortgage rates can move in opposite directions.
But given the historic speed and magnitude of the Fed’s 2022 and 2023 rate increases—raising the benchmark rate 5.25 percentage points over 16 months—even the indirect influence of the fed funds rate has resulted in a dramatic upward impact on mortgage rates over the last two years.
The Fed maintained the federal funds rate at its peak level for almost 14 months, beginning in July 2023. But in September, the central bank announced a first rate cut of 0.50 percentage points, and then followed that with quarter-point reductions in November and December.
For its third meeting of 2025, however, the Fed opted to hold rates steady—and it’s possible the central bank may not make another rate cut for months. At their March 19 meeting, the Fed released its quarterly rate forecast, which showed that, at that time, the central bankers’ median expectation for the rest of the year was just two quarter-point rate cuts. With five more rate-setting meetings scheduled this year, that means we could see more rate-hold announcements in 2025.
The Producer Price Index showed that wholesale prices rose by 0.1% in May, less than economists expected, while annual wholesale price increases were in line with estimates.
A consumer inflation report yesterday also showed prices weren’t rising as fast as expected in response to President Donald Trump’s tariff policies.
Economists did see some signals of increased inflation in the report, especially in rising prices for appliances, computer equipment, machinery, and vehicle wholesaling.
Economists are expecting a jump in inflation from President Donald Trump’s tariff policies, but once again it failed to show up in the latest pricing data.
Prices at the wholesale level came in lower than expected in May. That comes after yesterday’s consumer pricing data also failed to reveal an expected jump in inflation.
The Bureau of Labor Statistics’ Producer Price Index (PPI) showed prices rose 0.1% in May from April. Economists surveyed by The Wall Street Journal and Dow Jones Newswires expected a larger increase of 0.2%. The April reading showed wholesale prices were down 0.2% from the prior month.
On an annual basis, wholesale prices in May grew by 2.6%, in line with projections by Wells Fargo economists and an increase from last month’s reading of 2.4%. Core wholesale inflation, which takes out volatile food and fuel prices, also increased less than expected in May.
“Concerns about widespread increases in producer prices due to tariffs continue to be dissuaded. Cheaper costs for diesel and jet fuel helped to mute the headline gains with total intermediate goods only up modestly in May,” Nationwide Senior Economist Ben Ayers wrote.
Signals of Higher Tariffs Costs Show Up in Some Products
While price pressures continue to remain tame, economists said the report did show signs that inflation is working its way through the system following the implementation of U.S. tariffs.
The report noted that prices for machinery and vehicle wholesaling jumped 2.9%, while appliances and computer equipment costs also rose in May.
“The softer headline gain for the PPI in May hides much of the underlying cost pressures faced by producers. Tariff impacts are steadily flowing into prices for inputs, especially for metals, which is raising production costs for machinery and vehicles,” Ayers added.
BioNTech is buying fellow German firm CureVac for approximately $1.25 billion as the COVID-19 vaccine maker moves to expand into cancer treatments.
For each CureVac share they own, investors will get about $5.46 worth of BioNTech American Depositary Shares.
CureVac is developing cancer medicines using the same mRNA technology that BioNTech uses for its COVID-19 shot.
CureVac (CVAC) shares skyrocketed 37% Thursday when the biotech company agreed to be bought by COVID-19 vaccine maker and fellow German firm BioNTech (BNTX) in an all-stock deal valued at about $1.25 billion. The purchase boosts BioNTech’s move into producing new cancer treatments.
CureVac said its investors will receive approximately $5.46 worth of BioNTech American Depositary Shares for each CureVac share they own. That a 34% premium to yesterday’s closing price.
The company noted it is “developing a novel class of transformative medicines in oncology and infectious diseases based on messenger ribonucleic acid (“mRNA”).” BioNTech’s COVID-19 shot is also mRNA-based.
BioNTech co-founder and CEO Dr. Ugur Sahin said the deal is aimed at “advancing the development of innovative and transformative cancer treatments and establishing new standards of care for various types of cancer in the coming years.”
The transaction is expected to close this year and would see CureVac’s operating subsidiary become a wholly owned subsidiary of BioNTech.
Shares of CureVac soared to their highest level since December 2023. U.S.-listed shares of BioNTech were little changed and remain down nearly 8% year-to-date.
Boeing shares are slumping in early trading after a 787-8 aircraft was involved in an Air India plane crash early Thursday.
Air India Flight 171, carrying 242 passengers, was departing the western Indian city of Ahmedabad for London Gatwick airport and crashed “after take off,” Air India said.
Shares in engine maker GE Aerospace and Spirit AeroSystems are also dropping.
Boeing (BA) shares are slumping in early trading after a 787-8 aircraft was involved in an Air India plane crash early Thursday.
The Air India Flight 171, which was carrying 242 passengers, was departing the western Indian city of Ahmedabad for London Gatwick airport and crashed “after take off,” Air India said in a post on the X social media platform. It departed the Indian city at 1:38 p.m. local time, the airline said.
“We are in contact with Air India regarding Flight 171 and stand ready to support them. Our thoughts are with the passengers, crew, first responders and all affected,” a Boeing spokesperson said in a statement to Investopedia.
GE Aerospace, which provides engines for many Boeing aircraft, including the 787, said it is ready to support the crash probe.
“We have activated our emergency response team, and we are prepared to support our customer and the investigation,” the company said in a post on X.
Ahmedabad’s Police Commissioner G.S. Malik told The Associated Press that there were few signs of surviving passengers, noting that “it appears there are no survivors in the plane crash.”
The 787 model, popularly known as the Dreamliner, hadn’t had a fatal accident in its nearly 14 years in service, according to The Wall Street Journal.
Boeing’s reputation took a hit last year following a series of mishaps at its planes, including a door plug detaching in midair on an Alaska Airlines 737 Max 9 flight in January. Earlier this month, the plane maker agreed to settle a Justice Department case related to two fatal 737 Max crashes that claimed the lives of more than 300 people.
Boeing was the biggest decliner in the S&P 500 at the open Thursday, with shares falling more than 4%. Shares in other makers of Dreamliner parts also tumbled: Engine maker GE Aerospace (GE) shares are down 3%, and those of Spirit AeroSystems Holdings (SPR), which Boeing is in the process of reacquiring, are down 3%.
UPDATE—June 12, 2025: This article has been updated to include a comment from the Ahmedabad police commissioner and the latest share price information.
GameStop shares are dropping 17% in premarket trading Thursday, extending a post-earnings slide.
After the bell Wednesday, the video-game retailer announced a $1.75 billion convertible note offering. Shares fell more than 5% yesterday after GameStop reported a 17% year-over-year decline in first-quarter sales.
The retailer said last month that it had bought over 4,700 bitcoin.
The company late yesterday said it was planning to offer $1.75 billion in convertible notes, with another $250 million open to those who buy in first. The announcement came a day after GameStop reported a 17% year-over-year decline in first-quarter sales, which caused shares to fall more than 5% in Wednesday trading.
The new convertible note offering aligns with the retailer’s previously stated plans to raise new money to allow it to buy bitcoin, after adding the cryptocurrency to its corporate investment policy in March.
Last month, GameStop disclosed that it had purchased 4,710 bitcoin, worth slightly more than $500 million at the cryptocurrency’s current price of roughly $107,000. GameStop said it plans to use the new funds for “general corporate purposes, including making investments in a manner consistent with GameStop’s Investment Policy and potential acquisitions.”
GameStop shares entered Thursday down about 9% since the start of the year.
Oracle are jumping in premarket trading Thursday, a day after the tech giant’s fiscal fourth-quarter results topped analysts’ estimates.
CEO Safra Catz predicted “dramatically higher” revenue growth rates in its new fiscal year.
Analysts’ average price target for Oracle stock is up $20 from Wednesday to nearly $194, per Visible Alpha.
Oracle (ORCL) are jumping in premarket trading Thursday, a day after the tech giant’s fiscal fourth-quarter results topped analysts’ estimates.
CEO Safra Catz said the company’s fiscal 2025 was a “very good year,” but said she believes fiscal 2026 “will be even better as our revenue growth rates will be dramatically higher.”
The report made several analysts more bullish on Oracle, as the average price target compiled by Visible Alpha is about $194, up roughly $20 from what it was on Wednesday morning, hours before the earnings report was released.
Oracle shares, which are up 8% at more than $190 an hour before the bell, are on pace to open at their highest level since $191.51 on Jan. 22.
President Trump confirmed a trade deal with China was done. However, markets remained cautious as the agreement lacked concrete details and still requires final approval from US and China presidents. Then, overnight, Trump said he plans to send letters to trading partners within the next one to two weeks, outlining unilateral tariff rates ahead of a July 9 deadline. Risk sentiment soured and trade uncertainty ramped up once again.
The dollar weakened against most G10 currencies, while gold, the Swiss franc, and the yen gained on haven demand. The US dollar remains a key barometer of trade sentiment, and its failure to extend higher in the wake of the so-called deal with China was telling. Now, it’s under increased selling pressure once more, with the dollar index looking poised to hit a fresh 3-year low.
As the US engages with India and Japan to negotiate lower tariffs, some view Trump’s latest remarks as a tactic to increase pressure in trade discussions. Scepticism also remains about whether he will follow through on his pledge, given his track record of setting tight deadlines that often shift or go unfulfilled.
As ever, this persistent uncertainty continues to weigh on businesses, consumers, and investors, making it difficult to plan for potential policy shifts. Markets remain on edge, awaiting clearer signals on whether tariff adjustments will materialize or simply remain a negotiating tool.
Other updates on the tariff front
Kevin Ford – FX & Macro Strategist
On the tariff front, the US Appeals Court ruled that the IEEPA tariffs can stay in place until at least July 31st, when the case will be argued. A final decision on their legality might not come until August or later. If the administration loses again, they’d likely appeal to the Supreme Court, meaning the tariffs are probably sticking through the summer.
On the other hand, the U.S. and China have agreed to temporarily reduce certain tariffs for 90 days, until around August 12th, in an effort to ease trade tensions. The U.S. will suspend the 34% reciprocal tariff imposed on April 2nd and remove retaliatory tariff hikes from April 8th and 9th that had raised rates to 125%. However, a 10% baseline tariff remains on imports from China, Hong Kong, and Macau. Other tariffs, including those on fentanyl, autos, aluminum, steel, and long-standing Section 301 tariffs, remain unaffected. Additionally, the U.S. continues to enforce the removal of de minimis duty exemptions for Chinese imports.
China, in response, has agreed to lower its retaliatory tariffs on U.S. goods from 34% to 10% for the same 90-day period while removing the steep tariff increases from early April that had raised rates to 125%. However, previous tariffs of 10–15% on certain U.S. goods from February and March remain in place, as do longstanding retaliatory measures from 2019. Alongside these tariff adjustments, both countries have committed to ongoing trade discussions, with meetings led by senior officials from both sides to address broader economic relations beyond immediate tariff relief.
Slow grind lower
Kevin Ford – FX & Macro Strategist
Wednesday’s soft US CPI data has effectively reset rate expectations, bringing them back to where they stood at the end of last month, two cuts between now and year-end. Despite this shift, and yields dropping across the curve, there’s still no clear evidence of economic deterioration, keeping bearish sentiment firmly in control of USD trading across G10 currencies. Looking ahead, the June calendar offers little in the way of major macro catalysts, suggesting that, barring any surprises, this trend is likely to persist in relatively calm market conditions.
The Canadian dollar has been oscillating between 1.365 and 1.369, until today in overnight trading where it dropped below 1.365 and making a new 2025 low at 1.3625. The 1.365 will keep serving as a critical short-term support level. A decisive break lower hinges on sustained USD weakness or an unexpected boost from trade discussions ahead of the G7 summit this Sunday. Despite dollar softness, losses throughout the week have come mainly from the euro and pound. The CAD has remained range-bound between 1.372 and 1.365, struggling to build momentum below its weekly low. On the other hand, bullish bets in options markets have eased recently. Canadian pension funds and asset managers, known for low hedge ratios on U.S. assets, have ramped up hedging activity since late April. Given the size of the pension and insurance sector, their actions have had a notable market impact. At this point however, the FX market sentiment on the CAD has turned neutral.
Continued momentum
Kevin Ford – FX & Macro Strategist
The Mexican peso has maintained its recent momentum, breaking below its 200-week moving average support at 19 and reaching as low as 18.82 in intraday trading, its weakest level in nine months. In the short term, the peso is expected to consolidate its breakout and establish support near 18.9, with a potential rebound toward its 20-day moving average at 19.1.
A softer U.S. inflation report drove front-end Treasury yields lower, sparking a broad dollar selloff. At its peak, the peso surged more than 1.2% against the dollar, sending USD/MXN to its lowest level since last August. Meanwhile, one-year USD/MXN risk reversals dropped to their lowest point since January, suggesting a shift toward a structurally bullish stance on the peso rather than a short-term positioning play, reinforcing confidence in its medium-term outlook.
Euro’s tug-of-war: trapped in uncertainty
Antonio Ruggiero – FX & Macro Strategist
The euro climbed back above $1.15 versus the USD following a softer-than-expected US inflation report and Trump’s tough talk on tariffs again. The rally was underpinned first by heightened Fed rate cut expectations, which helped narrow the yield differential that still favours the dollar, offering some support to the euro. Still, the move stood out, as rate differentials have recently had a diminished role in driving price action, with broader US sentiment acting as the dominant force instead. Then came Trump’s latest tariff threat, which sent traders flocking to safe haven alternatives to the dollar.
EUR/USD has managed to break out of its well-worn and frustrating range between $1.1380 and $1.1445, although the move may prove short-lived. The common currency continues to struggle in mounting a sustained push toward April’s highs, with resilience in the US economic outlook proving a key headwind.
Underneath it all, volatility remains a crucial driver of short-term direction for the euro. Since the start of Trump’s presidency, the euro has been a primary beneficiary of heightened market uncertainty: Investors have piled into long euro positions, using it as a dollar alternative to hedge against US-driven volatility.
Over the past two months, however, EUR/USD risk reversals in favor of euro calls have softened across the volatility curve. While trade developments have curbed euro bullishness, other factors—some even euro-driven—may have quietly contributed to less aggressive positioning: Lagarde’s hawkish stance was undeniably supportive for the euro, but ultimately removed the very fuel that had been driving it higher for months—volatility. Markets now have clarity on the ECB’s policy path, with no rate cuts until after summer and only a 47.7% probability of a September cut. This reduced policy uncertainty has dampened speculative positioning around the July meeting, pulling down options market volatility. In other words, while the euro still benefits from dollar hedging, the lack of ECB-driven volatility as a catalyst weakens the case for a sustained bullish EUR/USD uptrend. After all, lower ATM volatility tends to drag down wing volatility, having a multiplier effect that weakens appetite for aggressive euro bets and ultimately reins in momentum.
Meanwhile, the euro’s ambition to rival the dollar as a global reserve currency remains distant. The ECB’s latest annual report, released yesterday, showed international euro usage remained flat in 2024 at 19%, while its FX reserve share held steady at 20%—just a third of the dollar’s dominance. Though the report doesn’t yet reflect recent market shifts, it underscores the long road ahead for the euro to challenge the dollar’s role. Meanwhile, rising demand for crypto and gold, with the latter having recently overtaken the euro as the second-largest central bank reserve asset, adds further obstacles to broader euro adoption.
Sterling struggles as gilt yields diverge
George Vessey – Lead FX & Macro Strategist
The weaker US dollar allowed the pound to claw back towards $1.36, but this morning’s softer-than-expected GDP data has forced the UK currency to pare gains. Still, GBP/USD continues to trade in the higher echelons of $1.35, over six cents higher than its 5-year average. GBP/EUR is looking vulnerable though after slipping below key daily moving averages of late, as the euro sweeps up a chunk of the demand flowing away from the dollar.
Away from the trade drama, the UK data this week has been a drag on the pound. The British economy shrank 0.3% m/m in April, the first decline in six months, and the biggest since October 2024. Services output fell by 0.4%, following growth of 0.4% in March, and was the largest contributor to the fall in GDP. Industrial and manufacturing production also came in below forecasts. The gloomy numbers follow a sharp decline in payrolls, with over 100,000 jobs lost in May, and means the likelihood of an August Bank of England rate cut has solidified further. Markets are pricing in two more rate cuts this year now, and as a result, two-year gilt yields are expected to trend lower in anticipation of easier policy, which could prove a strong headwind for sterling.
Long-end rates are expected to stay elevated though. The three-year spending plan outlined by UK Chancellor Rachel Reeves yesterday suggest sustained demand on public finances raising the likelihood of further borrowing and potential tax hikes down the line. Hence 10- and 30-year gilt yields keep pressing higher, widening the divergence with 2-year yields.
Dollar sinks to 2025 low. Euro shines as trade risk ramp up
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
Design software developer Adobe (ADBE) is slated to report fiscal second-quarter earnings after the bell Thursday, and investors are expecting a relatively modest share movement to follow.
Options pricing suggests traders anticipate Adobe stock to move about 6.6% in either direction the day after its earnings report. A move of that scale would lift shares to roughly $440, their highest level in three months, or drop them to about $386, a one-month low.
Adobe shares slipped 0.8% to $412.84 on Wednesday. The stock is down about 7% since the start of the year.
Adobe stock has registered an average post-earnings move of 12.6% over the past four quarters, and fell in three of those instances. A 6.6% gain or loss on Friday would represent the stock’s smallest post-earnings move since December 2023.
In March, shares dropped nearly 14% the day after Adobe reported record quarterly revenue but issued an outlook that underwhelmed investors. In December, it was a similar story: a worse-than-expected forecast sent shares tumbling more than 13%.
Most analysts are bullish on Adobe’s long-term outlook. Of the 17 Adobe analysts tracked by Visible Alpha, 10 rate the stock a “buy,” six are neutral, and one rates it a “sell.” The average price target of about $477 is more than 15% above the stock’s closing price on Wednesday.
Morgan Stanley analysts earlier this week said investor concerns about Adobe’s long-term competitiveness and generative AI opportunity should help Adobe “step over a low bar” when results come out Wednesday. The bank assigns the stock an “overweight” rating and an above-consensus price target of $510.
Fintech firm Chime priced its IPO at $27 per share, above the expected range, in the latest sign of a revival in new listings.
The online banking startup raised around $700 million in the IPO from the sale of 25.9 million shares, while existing investors sold about 6.1 million shares for nearly $165 million.
Shares of companies that listed recently, like USDC stablecoin issuer Circle Internet Group, Israel-based retail trading platform eToro, and space and defense tech firm Voyager Technologies, all surged in their trading debuts.
Fintech firm Chime late Wednesday priced its initial public offering (IPO) at $27 per share, above the expected range, in the latest sign of a revival in new listings.
Chime is set to start trading Thursday under the ticker symbol “CHYM.” The online banking startup raised around $700 million from the sale of 25.9 million shares, while existing investors sold about 6.1 million shares for nearly $165 million.
Last week, Chime said the IPO price was expected to be between $24 and $26 per share.
IPO Market Has Been Picking Up Recently
Shares of companies that debuted recently, like USDC stable coin issuer Circle Internet Group (CRCL), Israel-based retail trading platform eToro (ETOR), and space and defense tech firm Voyager Technologies (VOYG), all soared in their first day of trading.
In its prospectus last month, Chime reported 2024 revenue of $1.67 billion and a $62.2 million loss from operations. The company noted that it averaged $251 in revenue for each of its 8.6 million active members.
President Trump’s mixed signals and political theatrics complicate a landmark cross-border acquisition and raise red flags for foreign firms.
The year-and-a-half-long saga of Nippon Steel Corp.’s bid to buy U.S. Steel took another twist late last month when President Trump unexpectedly announced via social media post a “blockbuster agreement” to finally conclude the deal. But if we’re now in the final act of the drama, that was just Scene 1.
Scene 2 came and went on June 6, when Trump missed what was supposed to be a deadline to approve or reject a deal. Scene 3 is now expected before June 18, the date by which the two companies agreed to complete the deal—unless they decide to extend it.
Whether the final curtain in this cliffhanger drama gets extended yet again is still to be known. Meanwhile, interested parties from steelworkers and their families to U.S. Steel stockholders to Pennsylvania elected officials are pondering an assortment of critical but still up-in-the-air details. And other non-US companies are picking up some cautionary lessons about seeking US acquisitions in the Trump era.
With an executive order in January, outgoing President Joe Biden had blocked the U.S. Steel sale, which would have been one of the largest US acquisitions ever by a Japanese company, on national security grounds. Then in April, in a highly unusual move, Trump ordered the Committee on Foreign Investment in the United States to try again to make a recommendation on a Nippon Steel and U.S. Steel tie-up. CFIUS had failed to agree on a recommendation last fall and kicked the decision up to the Biden White House.
Trump received the committee’s recommendation on May 21, giving him 15 days—until June 6—to decide to overturn Biden’s executive order. He didn’t, although his social media post, and statements made at a rally at U.S. Steel’s nearly 90-year-old Mon Valley Works–Irvin Plant outside Pittsburgh,indicated he was prepared to do so.
Instead, the White House claimed he had only asked CFIUS for guidance, not a recommendation, and that the real deadline is June 18. Biden, in his executive order, had given Nippon Steel and U.S. Steel until then to abandon their deal, which means that to push it through, they must conclude it by that date.
What the president didn’t do was backtrack on his claim that a historic deal was within reach.
U.S. Steel will continue to be “controlled by the USA,” he declared at the rally; “otherwise, I wouldn’t have done the deal,” which he claimed to have brokered. Nippon Steel would plow $14 billion into its new properties, amounting to essentially the entire purchase price, including $2.2 billion to increase steel production in Mons Valley and another $7 billion for modernizing plants in other parts of the country, creating at least 70,000 jobs. Further, there would be no layoffs and the new owner would keep all current blast furnaces in full operation for at least 10 years.
“You’re not going to have to worry about that,” the president assured a community that has depended upon U.S. Steel for generations. “They’re going to be here a lot longer than that.”
Stakeholders Left Scratching Their Heads
Trump’s pronouncement left steelworkers, shareholders, analysts, and even Nippon Steel executives trying to tie up some important loose ends, however. Published reports indicated that the acquisition price of $55 per share that the two companies shook hands on in December 2023 was unchanged, and that the deal would still be a 100% acquisition, as Nippon Steel had always preferred: not an “investment,” as Trump earlier suggested.
But the biggest mystery involves the actual control structure the deal would put in place at U.S. Steel.
Republican Sen. David McCormick of Pennsylvania told reporters following Trump’s remarks that the company will continue to have an American CEO and an American-majority board of directors and that the US government will hold a “golden share,” meaning it will have the right to approve some of the board members. That in turn “will allow the United States to ensure production levels aren’t cut and things like that,” he said.
No material terms have emerged from the closely guarded Nippon Steel-U.S. Steel talks as to how this mechanism would be set up, however.
A “golden share” generally means a block of shares that lets the party holding them outvote all other shareholders. But such arrangements, while common in Germany and some other parts of Europe, are “not typical” in foreign acquisitions of US companies, notes Antonia Tzenova, leader of the CFIUS and Industrial Security Team at law firm Holland & Knight, and are generally resisted by the acquirer.
If the parties have something other than a classic golden share in mind, they have not disclosed it—and that constitutes an additional mystery. Trump said that he had not yet seen a formal deal, despite his having received a report on it from CFIUS. If a new deal has been agreed to, Tzinova points out, U.S. Steel has a legal obligation to reveal it to its shareholders.
And to the United Steelworkers, which represent U.S. Steel employees, union officials say.
“Neither President Trump nor Senator McCormick have offered any detail concerning the ‘planned partnership’ or the nature of ‘control by the USA’ of U.S. Steel following the closing of a transaction,” a union official said in a memo to the company—even though those details could affect U.S. Steel’s contract with the union.
Hard Lessons For Foreign Corporations
The two companies have pursued the sale doggedly for a year and a half; as if to underscore the urgency for a Japanese producer of acquiring U.S. operations, Trump announced shortly after his remarks in Mons Valley that Washington would be doubling tariffs on imported steel. But pushing through even a deal that makes economic sense is more difficult in the present era, Tzinova says.
Nothing about Nippon Steel’s initial proposal to buy U.S. Steel was very unusual, she notes, just its timing. Coming when a presidential election cycle was already under way, the deal quickly became a political issue. The lesson for non-US acquirers: avoid announcing a deal during an election year.
But Nippon Steel could have helped its cause, Tzinova adds, if it had lobbied more heavily and reached out more expansively to all the stakeholders involved. Those stakeholders would include the union and its members, local businesses for whom U.S. Steel is an economic anchor, and state governments. United Steelworkers President David McCall noted pointedly after Trump’s remarks that the union, which strongly opposed the sale, had not been included in the two companies’ discussions with the administration.
That’s another lesson non-US investors will have to learn going forward, Tzinova advises.
