- US "Liberation Day": US President Trump to announce reciprocal tariffs at 16:00EDT/21:00BST on Wednesday; US Commerce Secretary Lutnick speaks at 08:30EDT/13:30BST
- USTR has reportedly prepared "an across-the-board tariff on a subset of nations that likely would not be as high as the 20% universal tariff option", according to WSJ.
- Stocks move lower as markets await reciprocal tariff updates on “Liberation Day”.
- USD steady, Antipodeans outperform whilst Havens lag a touch.
- Bonds largely in a holding pattern as we await the Rose Garden speech.
- Crude is incrementally lower whilst spot gold prices remain underpinned by haven demand.
- Looking ahead, US ADP & Factory Orders, US Tariff Implementation Date, EU Defence Ministers Meeting, NBP Base Rate, ECB's Schnabel, Lane & Lagarde, Fed's Kugler & US President Trump.
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TARIFFS/TRADE
US
- USTR reportedly prepares a new tariff option for US President Trump which is "an across-the-board tariff on a subset of nations that likely would not be as high as the 20% universal tariff option", according to WSJ.
- US President Trump's tariff plans are "coming down to the wire" with his team reportedly still finalising the size and scope of the new levies, according to Bloomberg.
- US Treasury Secretary Bessent told lawmakers that Wednesday's tariffs are a 'cap', according to a CNBC reporter cited by Reuters.
OTHER NATIONS
- On UK-US tariffs, "Sounds like any hopes of a last-ditch concession from Donald Trump ahead of his tariffs announcement are fading", according to Times' Swinford; although a deal could be signed as soon as next week "Keir Starmer is not planning to speak to him today, but there are hopes that the economic deal giving Britain a carve-out can be signed as soon as next week. Sources talking about 'days or weeks'" "But in truth No 10 doesn't know what Trump is planning or when concessions could be made. All deeply uncertain this morning".
- Canada is to avoid counter-tariffs that risk Canadian jobs and price hikes and it won't impose retaliation tariffs on most US food and other basic necessities, according to the Globe and Mail citing two federal trade advisers.
- Thai Commerce Ministry said Thai semiconductors may face 25% US tariffs and noted that Thai tariffs are 11% higher than US tariffs, while it added Thailand may see an impact of USD 7bln-8bln from US reciprocal tariffs but announced it will increase imports of US goods and plans tariff cuts for US products.
- French Industry Minister reaffirms that Europe will respond to Trump tariffs in a proportionate manner; says Europe must show strength and be less naive
EUROPEAN TRADE
EQUITIES
- European bourses (STOXX 600 -0.9%) opened lower, despite a mostly positive picture in APAC trade and as traders remain focused on the looming reciprocal tariff announcements on “Liberation Day”. Price action has really only been downwards today, with a more pronounced bout of pressure appearing mid-morning though this has since stabilised a touch.
- European sectors hold a strong negative bias, in-fitting with the risk tone. Healthcare is the clear underperformer today, but with no clear stock driving the losses; the pressure is seemingly in tandem with the downside seen across US peers in the prior session, and perhaps some fears regarding potential pharmaceutical tariffs.
- US equity futures are modestly lower across the board, giving back some of the upside seen in the prior session and as traders brace themselves for the looming trade updates on “Liberation Day”; US President Trump is set to announce reciprocal tariffs at 16:00 EDT / 21:00 BST – Commerce Secretary Lutnick will do the media rounds before this, and is scheduled to appear on Bloomberg TV at 08:30 EDT / 13:30 BST.
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FX
- DXY is flat vs. peers as markets brace for US President Trump's "Liberation Day" announcement at 21:00BST/16:00EDT. Ahead of which, CNBC reported that Trump is looking at three main options which are, 1) blanket 20% tariffs, 2) a tiered system of three different rates and 3) country-by-country rates; an official noted blanket 20% tariffs was the least likely option. Thereafter, a WSJ article noted that the USTR was preparing a new tariff option for Trump of "an across-the-board tariff on a subset of nations that likely would not be as high as the 20% universal tariff option". Note, ahead of the announcement, US Commerce Secretary Lutnick could provide some insight on the matter during an interview on Bloomberg TV at 13:30BST. DXY is currently tucked within Tuesday's 104.01-36 range.
- EUR is flat vs. the USD and holding just below the 1.08 mark as the Bloc braces for the fallout of the US "Liberation Day". As it stands, the EU retaliated to the Trump administration's steel and aluminium levies with countermeasure” on up to EUR 26bln worth of US goods. Commentary via ECB's Lagarde and Rehn have added little fresh for the Single-currency. Today's EZ docket is light in terms of data but heavy on speakers with the slate including ECB's Lagarde, Schnabel, Lane, Holzmann and Escriva.
- JPY is flat vs. the USD after USD/JPY topped out at the 150 mark. Fresh newsflow out of Japan has been on the light side as markets await details of the Trump tariff regime later today. USD/JPY remains caged within Tuesday's 148.97-150.14 bounds.
- GBP is flat vs. the USD and EUR with incremental macro drivers for the UK on the light side. Of course, the main focus for today's session will be the severity of the Trump administration's tariff plans. The Times' Swinford suggested that "any hopes of a last-ditch concession from Donald Trump ahead of his tariffs announcement are fading". Cable is currently holding above the 1.29 mark.
- Antipodeans have extended on Tuesday's upward momentum which was facilitated as risk sentiment improved stateside and with Australian buildings approval data showing a narrower-than-feared contraction. That being said, it is worth noting that the Trump tariff announcement carries a lot of risk for AUD and NZD given that China (both nations largest trading partner) is very much in the crosshairs of the US administration.
- PBoC set USD/CNY mid-point at 7.1793 vs exp. 7.2663 (Prev. 7.1775).
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FIXED INCOME
- USTs are largely in a holding pattern overnight after coming under pressure in the US afternoon/evening on the more favourable tariff reports via CNBC, marked a 111-15 overnight low. More recently, modest upside occurred in the early European morning as the general tone deteriorated a touch. Ahead, markets will await trade updates from Commerce Secretary Lutnick at 08:30 EDT and then President Trump at 16:00 EDT. US data by way of ADP and Factory Orders is also due today, but ultimately may play second fiddle on "Liberation Day".
- Bunds are a touch firmer, the narrative is much the same as the above, though Bunds picked up slightly more than their US peer as the risk tone deteriorated in the early morning and have moved back into the green. Ahead a German 2035 Bund Auction and then a few ECB speakers are due - but focus will ultimately be on trade updates. Currently at the top-end of a 129.11-45 band, which is entirely within Tuesday’s 128.68-129.60 range.
- Gilts are in-fitting with the above though the bounce seen early doors, which took Bunds into the green as discussed, was only sufficient to cause Gilts to gap higher by five ticks and extend another two to a 92.15 peak. A high point which is shy of Tuesday’s 92.45 best. Tariffs dominate the narrative as we await Trump’s announcement. On the UK-US economic deal the Times’ Swinford reports that hopes of any last minute concessions for the UK are fading with no plans for the leaders to speak today.
- UK sells GBP 1.6bln 1.125% 2035 I/L Gilt : b/c 3.36x (prev. 3.52x) and real yield 1.268% (prev. 1.115%)
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COMMODITIES
- Softer trade across the crude complex amid the cautious risk sentiment heading into the "Liberation Day" tariff announcement by US President Trump and after the significant private inventory build. Continued expansion into Gaza by Israel's army, and punchy rhetoric via President Trump who believes Russian President Putin is stalling has failed to help push up prices. More recently, Axios reported that US President Trump is reportedly seriously considering Iran's offer of indirect nuclear talks - again failing to spur price action. Brent June trades in a USD 73.95-74.62/bbl parameter.
- Spot gold remains on a firmer footing after rebounding from the prior day's trough amid uncertainty ahead of the looming US reciprocal tariffs. Spot gold resides in a current USD 3,106.70-3,135.80/oz range.
- Copper futures eke mild gains but with the upside capped amid the mixed and cautious mood on 'Liberation Day'. Price action has been relatively contained for base metals thus far. 3M LME copper trades in a current USD 9,672.00-9,754.55/t range.
- US Private Energy Inventory Data (bbls): Crude +6.0mln (exp. -2.1mln), Distillate -0.0mln (exp. -1.0mln), Gasoline -1.6mln (exp. -1.7mln), Cushing +2.2mln.
- China's NDRC is to increase retail gasoline prices by CNY 230/ton and diesel by CNY 220/ton, effective April 3rd.
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NOTABLE DATA RECAP
- Germany's VDMA says February orders +8% Y/Y (domestic +11%, foreign +7%)
NOTABLE EUROPEAN HEADLINES
- ECB's Rehn says the ECB is not committing to any particular path; disinflation is on track, and growth outlook weakened, the bank will maintain complete freedom of action. Trade protectionism is a key risk to the economic outlook.
- ECB's President Lagarde says inflation is very close to the target but there is still some work to do.
- German banks' association said Germany's economy is expected to grow by 0.2% this year and 1.4% next year.
NOTABLE US HEADLINES
- Fed's Goolsbee (2025 voter) said hard data on the US economy is still pretty solid and if they can get past this period of uncertainty, the underlying strength of the economy is still there, according to a Fox News interview. Goolsbee said the fear is if tariffs on imports jump out of just imports and move into other costs, or people freak out and change behaviour, while he added the problem of tariffs is that they are a supply shock and noted that confidence is almost cratering.
GEOPOLITICS
MIDDLE EAST
- US President Trump is reportedly seriously considering Iran's offer of indirect nuclear talks, while at the same time significantly boosting US forces in the Middle East in case the US opts for military strikes, according to Axios; no decisions made "A US official said Trump doesn't want to go to war with Iran but needs the military assets to establish deterrence in the negotiations — and to be prepared to act if negotiations fail and things escalate quickly."
- Israel's army launched heavy raids on the city of Rafah in the southern Gaza Strip, according to Sky News Arabia.
- Israeli Defence Minister said they are expanding the operation in Gaza to seize large areas that would be added to the security zones of Israel and announced a large-scale evacuation of the Gaza population from fighting areas.
- US Defence Secretary Hegseth ordered additional air assets to strengthen their Middle East military posture.
- US conducted three new airstrikes on Saada in northern Yemen, according to Houthi-affiliated media cited by Al Jazeera.
RUSSIA-UKRAINE
- Bipartisan group of 50 Senators introduced a new sanctions measure which includes 500% duties against countries that purchase Russian oil, gas and uranium if Moscow refuses to participate in the peace process in Ukraine.
- Russian Defence Ministry says Ukraine attacked Russian energy facilities twice during the past 24 hours, via Ifax.
OTHER
- China's military conducted exercises in the middle and southern areas of the Taiwan Strait with exercises codenamed 'Strait Thunder 2025A', according to Xinhua. Furthermore, China's Eastern Theatre Command said it carried out long-range live fire shooting drills in waters of East China which involved precision strikes on simulated targets of key ports and energy facilities which achieved the desired effects.
CRYPTO
- Bitcoin is a little firmer and trades just shy of USD 85k whilst Ethereum moves a little lower.
APAC TRADE
- APAC stocks were mostly positive but with the major indices stuck within narrow parameters as participants awaited US President Trump's 'Liberation Day' tariff announcement scheduled later today.
- ASX 200 eked modest gains as strength in the real estate, tech and consumer discretionary sectors just about atoned for the losses in mining, resources and materials, while Building Approvals data from Australia printed better-than-feared.
- Nikkei 225 traded indecisively and wiped out most of its early gains as Japanese exporters braced for incoming US tariffs.
- Hang Seng and Shanghai Comp were mixed amid tariff uncertainty with China among the countries anticipated to announce an immediate retaliation to Trump's incoming tariffs, while China also awaits details regarding the US review of the 'Phase One' deal.
NOTABLE ASIA-PAC HEADLINES
- Standard Chartered raised its China 2025 GDP growth forecast to 4.8% from 4.5%.
- China's Commerce Ministry says the anti-dumping investigation into EU brandy has been extended to July 5th (from April 5th).
- US President Trump will consider a final proposal for TikTok on Wednesday and his administration is finalising plans for potential investors that could include Blackstone (BX) and Oracle (ORCL), according to CBS News. It was separately reported that President Trump is expected to meet senior cabinet officials and the Vice President to discuss potential investors for TikTok.
- US Senate Committee reviewing Meta (META) alleged efforts to build censorship tools for China as part of an attempt to gain entry to Chinese markets, according to a letter seen by Reuters.
- Fast Retailing (9983 JT) reports March domestic UNIQLO sales +11.5% Y/Y.
DATA RECAP
- Australian Building Approvals (Feb) -0.3% vs. Exp. -1.5% (Prev. 6.3%, Rev. 6.9%)
