- US Treasury Secretary Bessent said President Trump will announce reciprocal tariffs at 15:00EDT/20:00BST on Wednesday.
- US President Trump says maybe Tuesday night or Wednesday you will see tariff details and we are going to be nice in comparison to other countries, adds in some cases maybe substantially lower.
- European bourses gain and reside near session highs whilst US futures trade modestly on either side of the unchanged mark.
- USD slightly lower but with price action fairly contained ahead of “Liberation Day”, EUR little moved by EZ HICP.
- Bonds bid into April 2nd but USTs and Bunds remain around/shy of Monday's peaks.
- Choppy trade for the crude complex, but base metals largely supported by Chinese Manufacturing PMI.
- Looking ahead, highlights include US ISM Manufacturing PMI & JOLTS, US Completion of the Trade Policy Review, Speakers including Fed’s Barkin, ECB’s Lagarde & Lane.
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TARIFFS/TRADE
- US President Trump said we will see tariff details maybe Tuesday night or on Wednesday which are going to be nice in comparison to other countries and in some cases, they may be substantially lower. Trump also stated that many countries have been looting the US and they will stop that on April 2nd, as well as noted there will be investments worth USD 5tln in the US. Furthermore, he stated that TikTok is not tied to a larger tariff deal but could be.
- US Treasury Secretary Bessent said President Trump will announce reciprocal tariffs at 15:00EDT/20:00BST on Wednesday.
- US automakers seek to exclude low-value car parts from tariffs, according to Bloomberg.
- US State Department said Secretary of State Rubio spoke to his Mexican counterpart regarding the US automobile industry, while Rubio thanked Mexico for efforts to reduce illegal immigration and continuing to accept deportation flights.
- China's Foreign Minister Wang Yi said higher US tariffs on Chinese goods are unreasonable and harm global markets.
- UK Trade Secretary Reynolds says, "we are hopeful that Trump's tariffs will be reversed within weeks, or months"; adds, "It appears tomorrow there'll be no country in the world exempt from the initial announcements", via BBC Breakfast.
- EU Commission President von der Leyen says the bloc has the power to push back against US tariffs; all instruments are on the table for countermeasures; EU is open to negotiations on trade. Says EU needs to take down the remaining barriers in the single market. Adds, EU has a strong plan to retaliate if necessary and will use it.
- UK PM Starmer says discussions on an economic deal with the US are "well advanced".
EUROPEAN TRADE
EQUITIES
- European bourses (STOXX 600 +0.9%) are entirely in the green, as the region recovers from the prior day’s hefty losses. Indices have gradually climbed higher as the morning progressed.
- European sectors hold a strong positive bias, but with no clear outperformer and with gains fairly broad based given the risk tone. Healthcare leads the pack today, lifted by strength in AstraZeneca (+1.5%) after it reported positive trial results for its cholesterol drug, which has boosted hopes of another blockbuster drug. Consumer Products is a little higher today, with clothing brands benefiting in tandem with post-earning strength in PVH (+15.8% pre-market) which beat Q4 analyst expectations.
- US equity futures (ES -0.2%, NQ U/C, RTY -0.2%) are mixed and trade modestly on either side of the unchanged mark, unable to materially benefit from the positive risk tone in European trade. Traders remain focused on any trade-related updates, and with key US data by way of JOLTS and ISM Manufacturing also due.
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FX
- DXY is currently slightly softer but with FX markets broadly in a holding pattern in the run up to Wednesday's "Liberation Day". Ahead of which, US President Trump is said to be still deciding which plan he will take for reciprocal tariffs and has been presented with "multiple" tariff plans, according to administration sources cited by FBN's Lawrence. Today's US data docket includes JOLTS and ISM Manufacturing.
- EUR is trivially firmer vs. the USD following an indecisive session yesterday whereby markets digested softer-than-expected German inflation data and ECB sources. On the latter, Bloomberg reported that several ECB officials are still wavering on whether to cut interest rates next month.
- USD/JPY has failed to sustain a move above the 150 mark as markets digested mostly better-than-expected data via the latest unemployment and Tankan metrics. USD/JPY has delved as low as 149.51 but is some way off Monday's trough at 148.69.
- GBP is flat vs. the USD with fresh macro drivers for the UK on the light side aside from non-incremental comments from BoE's Greene that slack is opening up in the UK labour market and disinflation is continuing. Elsewhere, UK PM Starmer noted that discussions on an economic deal with the US are "well advanced". Cable is currently holding above the 1.29 mark and within yesterday's 1.2885-1.2972 bounds.
- Antipodeans are steady vs. the USD with little sustained follow-through from the RBA rate decision. As expected, the RBA held the Cash Rate at 4.1% as unanimously forecast and provided little clues for future policy. In the follow-up press conference, Governor Bullock noted the board did not discuss a rate cut - which did help to lift the Aussie slightly.
- PBoC set USD/CNY mid-point at 7.1775 vs exp. 7.2606 (Prev. 7.1782).
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FIXED INCOME
- USTs are firmer, and while the move is significant on the session, USTs are yet to surpass the top-end of yesterday’s 111-04 to 111-22+ band. Overall, the narrative remains much the same as markets countdown to "Liberation Day" and await any possible announcements/details on the eve of it. Ahead of that, traders will await US ISM Manufacturing PMI and JOLTS data.
- A similar narrative to USTs with Bunds firmer and at a 129.42 peak but shy of Monday’s 129.59 best. If that is surpassed, resistance features at 130.00 before 130.93 from mid-January. The bid this morning in EGBs, and fixed generally, comes as the market is seemingly, for now at least, more concerned with the growth implications than the inflation implications of the looming US measures. Tariffs/trade aside, the morning has seen modest downward revisions to March’s Manufacturing PMIs - though this move was not sustained. And on the inflation front, EZ HICP printed in-line on the headline and cooler than expected for the core and super-core Y/Y. Additionally, the Services Y/Y figure moderated to 3.4% (prev. 3.7%) - despite the cooler figures, a hawkish move was seen.
- Gilts are bid but, unlike its peers above, has managed to eclipse Monday’s 92.10 high to a 92.45 peak for the week. A level which encounters resistance from earlier in the month at 92.46, 92.48 and 92.56. Newsflow has unsurprisingly been focused on tariffs, with reports indicating that the UK-US trade deal has broad agreement and is ready to be signed once a few details are ironed out. Commentary from BoE's Greene has had little impact on UK-paper.
- Germany sells EUR 3.418bln vs exp. EUR 4.5bln 2.20% 2027 Schatz: b/c 3.5x (prev. 2.4x), average yield 2.01% (prev. 2.22%), retention 24.04% (prev. 22.29%)
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COMMODITIES
- A choppy session for the crude complex this morning. Price action was initially downward, giving back some of the prior day's upside, but recent CPC pipeline related newsflow has sparked a paring of this pressure and lifted the benchmarks marginally into the green . Reuters reported that Kazakhstan will have to start reducing oil production within days as CPC pipeline reduces intake. WTI May resides in a USD 71.27-71.75/bbl range while Brent June sits in a current USD 74.58-75.02/bbl parameter.
- Mixed trade across precious metals with spot gold continuing to hold near record highs, whilst spot silver is subdued and spot palladium coat-tails the gains across the Auto sector this morning. Spot gold currently resides in a USD 3,120.12-3,149.09/oz range.
- Mostly firmer trade across base metals, with the complex buoyed by the better-than-expected Chinese Caixin Manufacturing PMI data overnight which bodes well for the demand side of the equation. 3M LME copper currently trades in a narrow USD 9,712.40-9,794.00/t range.
- Kazakhstan will have to start reducing oil production within days as CPC pipeline reduces intake, according to Reuters citing multiple sources; CPC repairs will take more than a month, according to a singular source.
- Russian oil product exports from Black Sea Port of Tuapse planned at 0.864mln tons in April (prev. scheduled 0.798mln tons in March).
- Norway's Gassco sees higher gas deliveries Y/Y this summer due to less maintenance.
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NOTABLE DATA RECAP
- EU HICP Flash YY (Mar) 2.2% vs. Exp. 2.2% (Prev. 2.3%); Services Y/Y 3.4% (prev. 3.7%); HICP-X Food, Energy, Alcohol, Tobacco Flash MM (Mar) 1.00% (Prev. 0.50%); HICP-X Food, Energy, Alcohol & Tobacco Flash YY (Mar) 2.40% vs. Exp. 2.50% (Prev. 2.60%); HICP-X F&E Flash YY (Mar) 2.4% vs. Exp. 2.5% (Prev. 2.6%)
- EU Unemployment Rate (Feb) 6.1% vs. Exp. 6.2% (Prev. 6.2%)
- UK Nationwide House Price MM (Mar) 0.0% vs. Exp. 0.2% (Prev. 0.4%); YY 3.9% vs. Exp. 4.1% (Prev. 3.9%)
- UK S&P Global Manufacturing PMI (Mar) 44.9 vs. Exp. 44.6 (Prev. 44.6)
- EU HCOB Manufacturing Final PMI (Mar) 48.6 vs. Exp. 48.7 (Prev. 48.7)
- Spanish HCOB Manufacturing PMI (Mar) 49.5 vs. Exp. 49.9 (Prev. 49.7)
- Swiss Manufacturing PMI (Mar) 48.9 vs. Exp. 50.5 (Prev. 49.6)
- Italian HCOB Manufacturing PMI (Mar) 46.6 vs. Exp. 48 (Prev. 47.4)
- French HCOB Manufacturing PMI (Mar) 48.5 vs. Exp. 48.9 (Prev. 48.9)
- German HCOB Manufacturing PMI (Mar) 48.3 vs. Exp. 48.3 (Prev. 48.3)
- Swedish PMI Manufacturing Sect (Mar) 53.6 (Prev. 53.5)
NOTABLE EUROPEAN HEADLINES
- BoE's Greene says slack is opening up in the UK labour market, happy with central forecast for inflation, disinflation continues to be underway. There is a risk that productivity growth recovery does not happen as the BoE assumes. Rising UK public inflation expectations are concerning, "I think they remain anchored". Dollar's role as a reserve currency could be undermined by the current uncertainty.
- ECB's Rehn says if the data verifies the baseline, the right reaction in monetary policy should be to cut in April, via Politico
- ECB's Cipollone says "Digitalisation is driving economic progress and transforming the way we make retail payments".
NOTABLE US HEADLINES
- US President Trump signed an executive order establishing the United States Investment Accelerator which establishes an office within the Department of Commerce meant to facilitate and accelerate investments above USD 1bln in the US, while the White House said the Investment Accelerator is to administer the CHIPS program office.
- US President Trump signed an executive order aimed at protecting fans from 'exploitative ticket scalping' and reforming the US live entertainment ticketing industry, according to Reuters.
- US chip grants are reportedly in limbo as Commerce Secretary Lutnick pushes for more investment and signalled he could scrap past awards, according to Bloomberg.
- Boeing (BA) slows the production of 737 Max to 31 craft per month (current 38) to keep from derailing the assembly line, via Air Current; further slowing wing production.
GEOPOLITICS
MIDDLE EAST
- Israeli military said it attacked a Hezbollah target in Beirut's southern suburbs.
- Iran complained to the UN about reckless and belligerent remarks by US President Trump and said the remarks are a flagrant violation of international law and core principles of the UN Charter, according to a letter seen by Reuters. Iran said it is deeply regrettable and concerning that the US wields military power as its primary tool of coercion to advance political and geopolitical objectives, while it warned it will respond swiftly and decisively to any act of aggression or attack by the US or Israel against its sovereignty, territorial integrity or national interests.
RUSSIA-UKRAINE
- Ukraine's Foreign Minister says one round of consultations with the US has taken place on the new draft of the minerals deal, the process continues, the text entails strong presence of American business in Ukraine, which contributes to security.
- US President Trump said he wants to see Russian President Putin make a deal and wants to make sure Putin follows through, while Trump added he doesn't want to do secondary tariffs but noted secondary tariffs are something that he would do if Putin doesn't do the job.
- Russia Defence Ministry says Ukraine continues its attacks on Russia's energy infrastructure, via Interfax; Ukraine attacked Russia's energy infrastructure twice in the last 24hrs.
CHINA-TAIWAN
- Chinese military conducted joint army, navy and rocket force exercises around Taiwan, while it stated that sinister moves of Taiwan separatists will cause disaster for themselves and called Taiwan President Lai a parasite in a video related to the drill.
- Taiwan senior officials noted that more than 10 Chinese military ships approached close to Taiwan's 24 nautical mile contiguous zone on Tuesday morning and Taiwan dispatched its own warships to respond, while Taiwan's presidential official strongly condemned China's military drills and said China is widely recognised by the international community as a troublemaker.
- De facto US embassy in Taiwan said it is closely monitoring China's military activity near Taiwan and that China has shown that it is not a responsible actor and has no problem putting the region’s security and prosperity at risk. It also stated the US will continue to support Taiwan in the face of China’s military, economic, informational, and diplomatic pressure campaign.
OTHER
- US President Trump responded that there is communication when asked about North Korea and commented that he will probably do something on North Korea.
- US Secretary of State Rubio said the US is taking steps to impose visa restrictions on Chinese officials substantially involved in policies related to access for foreigners to Tibetan areas.
CRYPTO
- Bitcoin is a little firmer and sits just above USD 84k; Ethereum gains to a slightly larger magnitude and holds just shy of USD 1.9k.
APAC TRADE
- APAC stocks traded mostly higher as markets recovered from the recent sell-off and with sentiment helped by data releases although gains were capped as tariff uncertainty persists heading into April 2nd 'Liberation Day' reciprocal tariffs.
- ASX 200 advanced with broad gains seen across sectors, while there was a muted reaction to the RBA rate decision in which the central bank maintained the Cash Rate at 4.10% as unanimously forecast and provided little clues for future policy.
- Nikkei 225 rallied at the open after data showed a decline in the Unemployment Rate and a mostly better-than-expected Tankan survey although the index then pulled back and gradually reversed the gains after failing to sustain a brief reclaim of the 36,000 level.
- Hang Seng and Shanghai Comp were underpinned after stronger-than-expected Chinese Caixin Manufacturing PMI data.
NOTABLE ASIA-PAC HEADLINES
- Some Chinese banks have reportedly started raising interest rates amid growing bad consumer loans, weeks after cutting rates, according to Reuters sources; the move is expected to weigh on Beijing's efforts to stimulate the economy
- RBA kept the Cash Rate unchanged at 4.10%, as expected, while it stated the outlook remains uncertain, underlying inflation is moderating and sustainably returning inflation to target is the priority. RBA noted that monetary policy is well placed to respond to international developments if they were to have material implications for Australian activity and inflation, and noted that the board’s assessment is that monetary policy remains restrictive. Furthermore, it stated the continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the board is cautious about the outlook, while the board needs to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis.
- RBA Governor Bullock said in the post-meeting press conference there is a chance of more strength in the economy than seems and the board will continue to look at the data, while she said the board did not discuss a rate cut and holding rates was a consensus decision. Bullock also stated they have to be careful not to get ahead of themselves on policy and that the board has not made up its mind on a May move, while she said they are not endorsing the market path on future rate cuts. Furthermore, she said the board did not open the door to a May rate cut and there is more economic data to come, as well as updated forecasts for the May meeting.
- RBNZ said the Board is in the process of preparing a recommendation for the appointment of a Governor for six months and will be sending it to the minister soon, while it continues business as usual with Deputy Governor Christian Hawkesby as acting Governor and CEO until such time the minister makes an appointment.
DATA RECAP
- Chinese Caixin Manufacturing PMI Final (Mar) 51.2 vs. Exp. 51.1 (Prev. 50.8)
- Japanese Tankan Large Manufacturing Index (Q1) 12.0 vs. Exp. 12.0 (Prev. 14.0)
- Japanese Tankan Large Manufacturing Outlook (Q1) 12.0 vs. Exp. 9.0 (Prev. 13.0)
- Japanese Tankan Large Non-Manufacturing Index (Q1) 35.0 vs. Exp. 33.0 (Prev. 33.0)
- Japanese Tankan Large Non-Manufacturing Outlook (Q1) 28.0 vs. Exp. 29.0 (Prev. 28.0)
- Japanese Tankan Large All Industry Capex Estimate (Q1) 3.1% vs. Exp. 2.9% (Prev. 11.3%)
- Japanese Unemployment Rate (Feb) 2.4% vs. Exp. 2.5% (Prev. 2.5%)
