Treasuries weighed on and Equities soar as risk sentiment improves amid tariff reports over the weekend - Newsquawk US Market Open

• US President Trump reportedly plans his tariff 'Liberation Day' with a more targeted push, according to Bloomberg over the weekend.
• STOXX 600 began the week on a firmer footing before trimming opening gains after a mixed APAC handover; EZ Flash PMIs were mixed and largely highlighted trade uncertainty.
• DXY is lower after some choppy price action in early European trade. The macro narrative for the US has kicked the week off with a focus on the trade agenda.
• USTs are lower amid the encouraging risk environment on account of weekend reporting over the Trump tariff agenda.
• Crude prices are choppy. Benchmarks were lacklustre overnight amid the subdued risk appetite in Asia before trending higher in European hours; Precious and base metals hold mild upward biases.
• Looking ahead, highlights include US Flash PMIs, Speakers including BoEʼs Bailey, RBAʼs Jones, Fedʼs Bostic & Barr.

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TARIFFS/TRADE

• US President Trump reportedly plans his tariff 'Liberation Day' with a more targeted push, according to Bloomberg citing officials, while it was noted that Trump will announce widespread reciprocal tariffs on nations or blocs but is set to exclude some and the administration is currently not planning separate, sectoral-specific tariffs to be unveiled at the same event as Trump had once signalled. Furthermore, WSJ also reported that the "White House Narrows April 2 Tariffs" and that tariffs on industrial sectors such as cars and microchips are no longer expected to be announced although major trading partners will still be hit with reciprocal tariffs.
• Canadian PM Carney said they aim to have free internal trade by Canada Day on July 1st and can increase GDP by CAD 150bln by reducing internal trade barriers between provinces, while he added they will allow businesses to defer corporate income tax payments and GST and HST remittance due to new US tariffs. Furthermore, PM Carney called for a general election on April 28th and proposed a middle-class tax cut to reduce the lowest tax bracket by 1%, as well as noted that Trump’s tariffs and threat actions create the most significant crisis of our lifetime and said Trump wants to break them so the US can own them.
• China reportedly explores limiting exports to mollify US President Trump and may offer to curb the quantity of certain goods exported to the US, according to WSJ citing advisers to the Chinese government. Furthermore, it was also reported that Trump directed US federal agencies to assess the economic relationship between the US and China with the review due in early April.
• China’s Foreign Minister Wang said China wants to pursue trade talks with other countries.
• Malaysia is to crack down on NVIDIA (NVDA) chip flows under US pressure, while Malaysia's Trade Minister said Washington suspects high-end semiconductors are making it to China despite trade controls, according to FT.

EUROPEAN TRADE

EQUITIES

• STOXX 600 began the week on a firmer footing before trimming opening gains after a mixed APAC handover, which saw the Hang Seng close higher by almost 1% ahead of BYD earnings, the company holding a 2.8% weighting in the index, and other indices uneventful.
• Sentiment in Europe remains capped by ongoing geopolitics, with Russia-US talks in Ukraine ongoing in Riyadh, while Israel increases its offensive in Gaza and Lebanon.
• Sectors are mixed, after opening almost entirely in the green. Healthcare is the clear underperformer, led by losses in Bayer, which is down -7.4% at the time of writing. On the flip side, the best performing sector is Basic Resources, after JPMorgan gave a “Double Upgrade" to the Mining sector, which sees the likes of London-listed Antofagasta and Anglo American up 2.6% and 3.7% respectively.
• US equity futures are entirely in the green, each firmer by around 1%. This comes as risk sentiment improves amid the weekend’s tariff reports. Specifically, US President Trump has reportedly planned his “Liberation Day” with a more targeted push, set up to exclude some nations, or Blocs, according to Bloomberg. Looking ahead, the US day sees a fresh PMI release, and Fed speakers including Barr and Bostic. Of course, participants will also be looking for any response from the US Admin, after these Tariff related reports over the weekend.
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FX

• DXY is lower after some choppy price action in early European trade. The macro narrative for the US has kicked the week off with a focus on the trade agenda. This follows weekend reporting that Trump is set to announce (April 2nd) widespread reciprocal tariffs on nations or blocs but is set to exclude some and the administration is currently not planning separate, sectoral-specific tariffs to be unveiled at the same event as Trump had once signalled. This would provide some relief for the market, albeit would ultimately lead to a deterioration in the global trade outlook. Today's docket is light on data but with Fed's Bostic and Barr due to speak. The main data highlight this week comes on Friday via monthly PCE metrics. DXY is currently tucked within Friday's 103.75-104.22 range.
• EUR saw some fleeting support in early European trade following French PMI metrics which saw all three key measures beat on expectations and improve from their priors. Thereafter, the German and Eurozone metrics showed a mixed trend whereby, manufacturing beat estimates and rose from the priors, and services unexpectedly fell with composite improving but not by as much as expected. The accompanying report noted, "while we should not be carried away by a single data point, it is noteworthy that manufacturers expanded their output for the first time since March 2023". Elsewhere, EUR is likely benefitting from the mild positivity on the trade front (see USD section for details). EUR/USD is currently contained within Friday's 1.0795-1.0861 range.
• USD/JPY advanced from the APAC open to hit resistance just shy of the 150.00 handle with the early upside facilitated by the contraction across Japanese PMI data, while currency jawboning by officials was largely ignored. Furthermore, BoJ Governor Ueda remarked that the Bank cannot sell long-term JGB holdings immediately and has been gradually tapering long-term JGB holdings. Ueda reiterated that the BoJ will adjust the degree of monetary easing if the 2% inflation target is likely to be achieved. If 150 gives way, the 19th March high kicks in @ 150.14.
• GBP is firmer vs. the USD and one of the better performers across the majors. GBP received some mild additional support following the latest PMI metrics which saw an improvement and beat expectations for the all-important services metrics and a disappointing outturn for services. Overall, this filtered through into a beat for the composite metric. The accompanying report noted that “The signal from the flash PMI is an economy eking out a modest expansion in March, consistent with quarterly GDP growth of just 0.1%, but with employment continuing to be cut thanks to concern over costs and the uncertain outlook". Elsewhere, attention this week will be on Chancellor Reeve's spring statement and UK CPI, both due to hit on Wednesday. Cable is currently tucked within Friday's 1.2888-1.2970 range.
• Antipodeans are mixed amid the indecisive risk tone and with AUD/USD kept afloat following the acceleration in Australia's flash PMI data. AUD/USD is just about back above its 50DMA @ 0.6288 but has stopped shy of the 0.63 mark. If breached, Friday's high sits @ 0.6305. NZD/USD is pretty much flat and off worst levels after slipping to its lowest level since 14th March overnight @ 0.5719.
• PBoC set USD/CNY mid-point at 7.1780 vs exp. 7.2496 (Prev. 7.1760).
• Barclays month-end rebalancing model indicates a strong dollar-buying signal by month-end against all majors Quarter-end rebalancing model using the same framework indicates a moderate dollar-buying signal against most majors, with a strong sign on EUR/USD. Overall, the signal shows a strong dollar-buying at the end of March.
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FIXED INCOME

• USTs are lower amid the encouraging risk environment on account of weekend reporting over the Trump tariff agenda. To recap, Trump is set to announce (April 2nd) widespread reciprocal tariffs on nations or blocs but is set to exclude some and the administration is currently not planning separate, sectoral-specific tariffs to be unveiled at the same event as Trump had once signalled. This would provide some relief for the market, albeit would ultimately lead to a deterioration in the global trade outlook.
• Bunds are lower and tracking the price action seen across global peers. Focus in the Eurozone today has fallen on regional PMI metrics, whereby France kicked off proceedings with all three key measures beating on expectations and improving from their priors. Thereafter, the German and Eurozone metrics showed a mixed trend whereby, manufacturing beat estimates and rose from the priors, and services unexpectedly fell with composite improving but not by as much as expected. The accompanying report noted, "while we should not be carried away by a single data point, it is noteworthy that manufacturers expanded their output for the first time since March 2023". Elsewhere, despite the recent fiscal reform package approved by the German Parliament, the Q2 German issuance forecast was unchanged from the December forecast.
• Gilts are bucking the trend seen across major global peers following the notable selling seen on Friday in the wake of disappointing public spending data. Today's session has seen the latest UK PMI metrics which saw an improvement and beat on expectations for the all-important services metrics and a disappointing outturn for services. Overall, this filtered through into a beat for the composite metric. The accompanying report noted that “The signal from the flash PMI is an economy eking out a modest expansion in March, consistent with quarterly GDP growth of just 0.1%, but with employment continuing to be cut thanks to concern over costs and the uncertain outlook".
• German Debt Agency Q2 issuance outlook: unchanged from December 2024 forecast.
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COMMODITIES

• Crude prices are choppy. Benchmarks were lacklustre overnight amid the subdued risk appetite in Asia before trending higher in European hours. Price action follows the deluge of geopolitical-related headlines over the weekend - including US-Ukraine talks and Israel strikes against Hamas and Hezbollah. On the Russia-Ukraine front, closed talks between US and Russian delegations in Riyadh commenced, with traders on the lookout for an alignment between Russia and Ukraine's demands, albeit unlikely. During the talks, Russia reported Ukraine attempted to attack an oil pumping station in Russia's Krasnodar. Russia's Kremlin, on energy strike moratorium, said they are monitoring the situation after attacks by Ukraine. In the Middle East, recent reports via AP suggested Egypt has put forward a new proposal to try to put the ceasefire between Israel and Hamas back on track - reports which seemingly sparked some weakness in the complex - with Israel signalling positive but large gaps. Over the weekend, Israel carried out multiple air strikes on Lebanon after several rockets were fired from Lebanon into Israel. Iranian Foreign Ministry warned of the repercussions of the new Israeli escalation against Lebanon, according to Sky News Arabia In Europe, a mixed set of Flash PMIs offered little in terms of direction for the crude complex, although one key theme highlighted by the regional and EZ-wide release was tariff uncertainty. WTI May resides in a USD 67.95-68.60/bbl range while its Brent counterpart sits in a USD 71.80-72.45/bbl parameter.
• Precious metals hold a mild upward bias as DXY trades flat/subdued and eyes remain on geopolitics, with Israel said to be expanding its operations in Gaza, although Egypt has put forth a renewed ceasefire proposal. Spot gold lacked firm direction overnight after last week's pullback from record levels and as participants look ahead to a relatively busy calendar for US data this week, including the latest Core PCE prices on Friday. The yellow metal resides in a USD 3,013.99-3,030.80/oz parameter.
• Copper futures remain afloat after the recent rally in prices, with the red metal eventually topping the psychological USD 10k level. 3M LME copper currently resides towards the upper end of a USD 10,035.00-9,909.67/t range.
• JP Morgan double-upgrades European Mining Sector to Overweight from Underweight.
• US President Trump told oil executives in a meeting during the prior week that he would consider efforts the administration might take to help oil firms fend off legal risks over climate issues, according to WSJ.
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NOTABLE EUROPEAN DATA RECAP

• French Flash PMIs: Manufacturing (Mar) 48.9 vs. Exp. 46.5 (Prev. 45.8); Services (Mar) 46.6 vs. Exp. 46.0 (Prev. 45.3); Composite (Mar) 47.0 (Prev. 45.1).
• German Flash PMIs: Manufacturing (Mar) 48.3 vs. Exp. 47.3 (Prev. 46.5); Services (Mar) 50.2 vs. Exp. 51.5 (Prev. 51.1); Composite (Mar) 50.9 vs. Exp. 51.0 (Prev. 50.4)
• EZ Flash PMIs: Manufacturing (Mar) 48.7 vs. Exp. 48.4 (Prev. 47.6); Services (Mar) 50.4 vs. Exp. 51.0 (Prev. 50.6); Composite (Mar) 50.4 vs. Exp. 50.5 (Prev. 50.2)
• UK Flash PMIs: Services (Mar) 53.2 (Prev. 51.0); Manufacturing PMI (Mar) 44.6 (Prev. 46.9), Composite PMI (Mar) 52.0 (Prev. 50.5)

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Reeves ordered GBP 2bln of Whitehall cuts to help fix the nation’s finances, according to FT. It was separately reported that Reeves said the UK will cut 10,000 civil service jobs, according to Bloomberg. Furthermore, Reeves will stick to fiscal rules despite global turmoil which raises the prospect of belt-tightening measures in the budget update this week, according to Reuters.
• ECB's Cipollone said key elements strengthen the case for further interest rate cuts; "recent data suggests we might reach the inflation target sooner than expected", via Expansion.
• Czech Republic is to rescue Radio Free Europe after US President Trump’s funding cuts, according to FT.

NOTABLE US HEADLINES

• US President Trump signed a memorandum aimed at preventing abuses of the legal system and federal courts and directed the Attorney General to seek sanctions against lawyers and law firms that engage in frivolous unreasonable and vexatious litigation against the US government or departments and agencies of the government.
• US tax revenue could drop by 10% amid turmoil at the IRS from staff cuts and disruptions related to DOGE, according to Washington Post.
• US President Trump’s administration revoked temporary legal status for 530k Cubans, Haitians, Nicaraguans and Venezuelans in the US effective April 24th.
• US Treasury is considering streamlining bank regulators, according to Semafor; Treasury is drafting recommendations on OCC and FDIC.

GEOPOLITICS

MIDDLE EAST

• "Israeli Channel 12 on government sources: The military operation will be expanded and what we have done so far has not pushed Hamas to any understandings towards reaching a deal", according to Al Jazeera.
• AP said Egypt has put forward a new proposal to try to put the ceasefire between Israel and Hamas back on track.
• "There are positive indications about a new Egyptian proposal in the negotiations, but the gaps are still large", according to Israel's N12.
• Israeli PM Netanyahu spoke with US Secretary of State Rubio and discussed regional developments including the release of hostages and resumption of fighting in Gaza.
• Israel’s military said a projectile was launched from Yemen towards Israel which was intercepted and it conducted strikes on Rafah and Khan Younis, while Israel’s military also said the division that operated in Lebanon is preparing for Gaza activity.
• Israel conducted an air strike which killed Hamas political leader Salah Al-Bardaweel in the southern Gaza Strip and targeted the surgery department at Gaza’s Nasser Hospital which killed Hamas political bureau member Ismail Baarhoum.
• US peacekeepers said an escalation of the volatile situation at the Lebanon-Israel border could have serious consequences for the region, while it was reported that Israeli PM Netanyahu ordered strikes against dozens of targets in Lebanon in response to rocket fire although Hezbollah denied any link to rocket launches from southern Lebanon on Saturday.
• White House National Security Adviser Waltz said the US took out key Houthi leadership during strikes in Yemen, as well as weapons factories and some drone facilities, while he added that the US is seeking full dismantlement of the Iranian nuclear program in a way the entire world can see.
• US envoy Witkoff said Hamas is the aggressor here and had every opportunity to demilitarise and accept the bridging proposal but they elected not to. Witkoff also stated that their signal to Iran is let’s sit down and see if we can get to the right place through diplomacy, while he added that Iran cannot have a nuclear bomb which cannot and will not happen.
• Iran’s Foreign Minister Araqchi said talks with the US are impossible unless Washington changes its pressure policy.
• Iranian Foreign Ministry warned of the repercussions of the new Israeli escalation against Lebanon, according to Sky News Arabia.

RUSSIA-UKRAINE

• Negotiations between the delegations of the Russian Federation and the US last about two hours; "the parties do not plan to complete the meeting in the near future", according to TASS.
• Russia's Kremlin said Saudi Arabia negotiations are underway on technical issues, there are many different aspects related to a settlement in Ukraine that need to be worked out. The Black Sea initiative is on the agenda in these talks. There is a common understanding with the US on the willingness to move towards a settlement
• Russia's Defence Ministry says Ukraine attempted to attack an oil pumping station in Russia's Krasnodar region, according to IFAX; the station is out of operation for repairs.
• Russia's Kremlin, on energy strike moratorium, said they are monitoring the situation after attacks by Ukraine.
• Ukraine and US delegations began talks in Saudi Arabia, while Ukrainian President Zelensky said the Ukrainian delegation is working in a completely constructive way and the conversation is quite useful. There were also comments from the Ukrainian Defence Minister that the agenda for talks included proposals to protect energy facilities and critical infrastructure.
• White House National Security Adviser Waltz said the US is talking through a number of confidence-building measures to end the Russia-Ukraine war including the future of Ukrainian children taken into Russia.
• US envoy Witkoff said the US expects a lot more progress on the Russia-Ukraine conflict and that Russian President Putin does not want to take all of Europe with the situation much more different than WW2.
• White House is aiming for a Russia-Ukraine truce agreement by April 20th, according to Bloomberg.
• Russia’s Kremlin said the Putin-Trump call was a step towards a face-to-face meeting and talks in Saudi Arabia will be as well. It was also reported that the Russian Defence Ministry said Russian forces took control of Sribne in eastern Ukraine, according to IFAX.

OTHER

• South Korea’s Foreign Minister said sanctions against North Korea must be carried out faithfully and that North Korea should not be rewarded for its wrongdoing in the course of the war in Ukraine.
• Venezuela’s government said it will resume repatriation flights of migrants from the US beginning on March 23rd.

CRYPTO

• Bitcoin ultimately gained after oscillating through the USD 86,000 level to levels north of USD 87,500.

APAC TRADE

• APAC stocks traded mixed in a rangebound fashion amid tariff and trade-related uncertainty, while weekend newflow was mostly centred around geopolitics although there were some reports that suggested the potential for a more focused approach by US President Trump regarding April 2nd 'Liberation Day' reciprocal tariffs.
• ASX 200 was little changed as strength in financials and consumer discretionary offset the underperformance in consumer staples and tech, while the latest flash PMI data from Australia accelerated.
• Nikkei 225 swung between gains and losses with price action indecisive amid a weaker currency and a deterioration in Japanese flash PMIs which all printed in contraction territory.
• Hang Seng and Shanghai Comp conformed to the lacklustre mood amid lingering frictions although Chinese Premier Li stated at a business forum it is necessary for countries to open up their markets in an increasingly fragmented world and that China was ready for any unexpected shocks, while the PBoC reiterated its pledge to cut rates and RRR at an appropriate time during its quarterly meeting on Friday.

NOTABLE ASIA-PAC HEADLINES

• PBoC to conduct CNY 450bln of 1-year MLF operation on Tuesday. MLF operation to be carried out by adopting a fixed quantity, interest rate bidding, and multiple price bidding method.
• Chinese Premier Li said at a business forum it is necessary for countries to open up their markets in an increasingly fragmented world and countries must work to resist risks and challenges from rising instability and uncertainty. Li also stated that China was ready for bigger than expected external shocks and will focus on combining policy intensification with stimulating market forces, as well as deepening reform of the economic system and will strive to open up chokepoints of the economic cycle.
• US GOP Senator Daines met with Chinese Vice Premier He Lifeng on Saturday and noted that they are at a time when they have important issues to discuss between the two countries, while Senator Daines also met with Premier Li Qiang on Sunday in Beijing.
• BoJ Governor Ueda said they cannot sell long-term JGB holdings immediately and have been gradually tapering long-term JGB holdings now. Ueda said the purpose of BoJ policy is to achieve stable prices and will not be disturbed by consideration for state finances, while he reiterated that the BoJ will adjust the degree of monetary easing if the 2% inflation target is likely to be achieved. Ueda said will not rule out the possibility of selling BoJ's government bond holdings.
• Japanese Finance Minister Kato said it is important for currencies to move in a stable manner reflecting fundamentals and they will take appropriate action against excessive moves.
• South Korea's Constitutional Court overturned the impeachment of Prime Minister Han, while Han stated he will address urgent issues of trade as a priority after being reinstated as the acting President.

DATA RECAP

• Japanese JibunBK Manufacturing PMI Flash SA (Mar) 48.3 (Prev. 49.0)
• Japanese JibunBK Services PMI Flash SA (Mar) 49.5 (Prev. 53.7)
• Japanese JibunBK Composite PMI Flash SA (Mar) 48.5 (Prev. 52.0)
• Australian Manufacturing PMI (Mar P) 52.6 (Prev. 50.4)
• Australian Services PMI (Mar P) 51.2 (Prev. 50.8)
• Australian Composite PMI (Mar P) 51.3 (Prev. 50.6)

GLOBAL NEWS

• Turkish court formally arrested Istanbul Mayor Imamoglu after prosecutors asked the court to keep Imamoglu and four aides in jail pending their trial on terrorism and corruption charges. It was also reported that Turkey’s Central Bank Governor said in a meeting with bank executives that the central bank will do whatever is necessary within market rules, while the Capital Markets Board announced a ban on short selling on the Istanbul Stock Exchange until April 25th, eased the equity ratio requirement for credit capital markets transactions and removed the maximum limit for the total amount to be used for share buybacks of listed companies.