- US stocks closed notably lower, albeit slightly off lows, with the Nasdaq 100 the laggard as chip names were hit on a disappointing Marvell (MRVL) (-20%) report, while the narrative of the day surrounded the main two macro themes of tariffs and US growth concerns. There was an abundance of tariff updates including US President Trump signing an amendment to Mexico and Canada tariffs to make USMCA-compliant products exempt from levies until April 2nd. Meanwhile on the data footing, a hefty rise in Challenger layoffs, with a large chunk driven by government cuts, reignited concerns surrounding US growth.
- USD was ultimately flat on the day but was pressured in early trade amid initial strength in its major peers, tariff-related uncertainty and mixed labour data releases ahead of Friday's NFP report as Initial Jobless Claims printed lower-than-expected but Challenger Layoffs surged. On the tariff front, US President Trump announced he reached an agreement to delay USMCA-compliant tariffs on Canada and Mexico until April 2nd, while there were also Fed speakers including from Waller who doesn't see a case for a March rate cut but could see rate cuts after March Fed meeting and noted the median of two cuts for 2025 remains reasonable.
- Looking ahead, highlights include Chinese Trade Balance, Exports & Imports, Thailand CPI, Comments from Fed's Barkin & Bostic, Supply from Australia.
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LOOKING AHEAD
- Highlights include Chinese Trade Balance, Exports & Imports, Thailand CPI, Comments from Fed's Barkin & Bostic, Supply from Australia.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks closed notably lower, albeit slightly off lows, with the Nasdaq 100 the laggard as chip names were hit on a disappointing Marvell (MRVL) (-20%) report, while the narrative of the day surrounded the main two macro themes of tariffs and US growth concerns. There were an abundance of tariff updates including US President Trump signing an amendment to Mexico and Canada tariffs to make USMCA-compliant products exempt from levies until April 2nd. Meanwhile on the data footing, a hefty rise in Challenger layoffs, with a large chunk driven by government cuts, reignited concerns surrounding US growth.
- SPX -1.78% at 5,738, NDX -2.79% at 20,052, DJI -0.99% at 42,578, RUT -1.64% at 2,066.
- Click here for a detailed summary.
TARIFFS/TRADE
- US President Trump said most tariffs are to start April 2nd and predominant tariffs will be reciprocal, while he said steel and aluminium tariffs will not be modified. Trump cited a little short-term interruption on tariffs and said tariffs are something the US has to do. Trump said he is not even looking at the market and noted the long-term economy is very strong. Furthermore, Trump said there is no USMCA exemption for auto tariffs next month, according to Reuters.
- US President Trump posted on Truth "After speaking with President Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement. This Agreement is until April 2nd". It was later reported that Trump signed the amendment to Mexico and Canada tariffs to make USMCA-compliant products exempt from levies until April 2nd.
- Mexican President Sheinbaum said the call with US President Trump was excellent and respectful, while they will keep working together, particularly on migration and security, particularly the crossing of fentanyl into the US, and said the agreement to pause tariffs on Mexico's USMCA-compliant goods is until April 2nd. Furthermore, Sheinbaum said US President Trump at first proposed leaving tariffs and then reviewing, while she added with Mexico not charging tariffs to US imports, Trump's reciprocal tariffs shouldn't apply from April 2nd. Mexican President Sheinbaum also commented that they must revise their tariffs with China, while she added Mexico doesn't have a free trade deal with China and imports a lot from China.
- US President Trump stated on Truth "Believe it or not, despite the terrible job he’s done for Canada, I think that Justin Trudeau is using the Tariff problem, which he has largely caused, in order to run again for Prime Minister. So much fun to watch!".
- Canadian PM Trudeau said they are in discussions over potentially delaying the 2nd wave of planned tariffs and any carve-outs from US tariffs are going to be a good thing, while he added that recent remarks from US Commerce Secretary Lutnick are promising and align with some of the conversations they have been having with the administration.
- Canada will not react to US President Trump's latest move on tariffs until officials have studied the executive order, according to Reuters citing a Canadian government source.
- US Treasury Secretary Bessent said at the Economic Club of New York that Trump's April reciprocal tariffs will be 'path dependant' depending on its trading partners and that Trump is open to negotiating on tariffs but not "if you want to be a numbskull like Justin Trudeau."
- US Commerce Secretary Lutnick said tariff reprieve is not likely just about automakers and is likely to include all USMCA-covered products in which the reprieve is for one month. Lutnick said that hopefully by April 2nd Mexico and Canada will have done enough on fentanyl that this part of the conversation is over and it will just be about reciprocal tariffs, while he added expectation is April 2nd reciprocal tariff rates start high and then start coming down.
- White House Official told Fox additional tariff extensions will be announced for additional sectors which follows Trump’s announcement on a pause on his added tariffs on Mexico for anything covered by USMCA, according to FBN's Lawrence.
- UK Business Secretary Jonathan Reynolds vowed to ‘stand up’ for British steel as US tariffs loom, according to FT.
NOTABLE HEADLINES
- Fed Governor Waller (voter) said not all tariffs are passed through and policy is still restrictive, while he added the Fed can cut rates for positive and negative reasons. Waller said they are seeing some signs of softer data and have to respond to hard data, as well as noted he is waiting to see if weakness in soft data shows up in broader statistics and the Fed still needs more data to understand economic outlook. Furthermore, Waller doesn't see a case for a March rate cut but could see rate cuts after the March Fed meeting and noted the median of two cuts for 2025 remains reasonable.
- Fed's Harker (2026 voter) said the economy generally looks ok, but there are threats to this, while business and consumer confidence is waning which is not good. Harker added he is worried more and more about factors that could threaten dollar reserve status.
- US President Trump said the CEO of CMA CGM Shipping is to invest USD 20bln in the US and is to announce a new programme for shipbuilding soon.
- US Treasury Secretary Scott Bessent told Israeli Finance Minister Smotrich this week that the US is reconsidering the ban on exporting AI chips to Israel and that developments on this matter may occur very soon, according to Jerusalem Post.
- US House Speaker Johnson aims to hold a CR vote on Tuesday and expects it will pass, while the CR text could be released as soon as Friday.
DATA RECAP
- US Wholesale Sales MM (Jan) -1.3% (Prev. 1.0%, Rev. 1.4%)
- US Wholesale Inventory R MM (Jan) 0.8% vs. Exp. 0.7% (Prev. 0.7%)
- US Initial Jobless Claims 221.0k vs. Exp. 235.0k (Prev. 242.0k)
- US Continued Jobless Claims 1.897M vs. Exp. 1.88M (Prev. 1.862M, Rev. 1.855M)
- US Challenger Layoffs (Feb) 172.017k (Prev. 49.795k)
FX
- USD was ultimately flat on the day but was pressured in early trade amid initial strength in its major peers, tariff-related uncertainty and mixed labour data releases ahead of Friday's NFP report as Initial Jobless Claims printed lower-than-expected but Challenger Layoffs surged. On the tariff front, US President Trump announced he reached an agreement to delay USMCA-compliant tariffs on Canada and Mexico until April 2nd, while there were also Fed speakers including from Waller who doesn't see a case for a March rate cut but could see rate cuts after March Fed meeting and noted the median of two cuts for 2025 remains reasonable.
- EUR ended the session relatively little changed after failing to sustain initial gains, while the attention was on the ECB which unsurprisingly cut rates by 25bps and tweaked its language as it stated "monetary policy is becoming meaningfully less restrictive" (prev. monetary policy remains restrictive), while ECB sources noted that the current 2.5% is unlikely to be the bottom of the cycle and if the US imposed tariffs on the EU, chances of more cuts are raised, potentially starting in April.
- GBP softened on the day with GBP/USD back beneath the 1.2900 handle amid light pertinent macro drivers and the broad risk-off tone.
- JPY strengthened amid haven demand, while reports noted Japan's largest labour union Rengo is seeking a wage hike of 6.09% for 2025 (sought 5.85% in 2024).
- Turkish Central Bank Weekly Repo Rate (Feb) 42.5% vs. exp. 42.5% (Prev. 45.0%), while it stated going forward, increased coordination of fiscal policy will also contribute to the process of price stability.
FIXED INCOME
- T-notes swung between gains and losses amid mixed labour market data, tariff updates and a soured risk sentiment ahead of NFP.
COMMODITIES
- Oil prices were choppy and settled more-or-less flat as the complex continued to tackle tariff uncertainty, US growth concerns, economic data and geopolitics.
- Baghdad meeting on Kurdish oil resumption ended with no agreement, according to Reuters sources.
GEOPOLITICAL
MIDDLE EAST
- Discussions took place on Wednesday evening between US President Trump's envoy, Hamas leaders and mediators from Egypt and Qatar, according to Reuters sources. The American-Egyptian talks discussed governance of Gaza after the end of the war and names of who would manage the strip, while it was noted that discussions ended positively, and indicated a near transition to a second phase of the Gaza ceasefire agreement.
- Trump administration reportedly mulls plan to inspect Iranian tankers at sea, according to Reuters sources. Furthermore, it was stated that President Trump vows 'maximum pressure' to drive Iran oil exports to zero, while it was also noted that Iran has retaliated at previous attempts to stop oil exports.
- US Treasury Secretary Bessent said the US will close Iran's access to the global financial system and they are going to shut down Iran's oil sectors and drone manufacturing capabilities, while he also stated that access to cheap goods is not the essence of the American dream.
- US State Department urged the Iraqi government to eliminate dependence on Iranian sources of energy as soon as possible.
RUSSIA-UKRAINE
- Ukrainian President Zelensky said Ukraine and the US are to have a meaningful meeting next week and that Ukraine seeks a truce for air strikes and sea operations, while he added that Russia needs to release POWs to establish trust. Zelensky also said he will meet with the Saudi Crown Prince next week, and then the Ukraine team will remain in Saudi for a meeting with US officials.
- US President Trump said he made a lot of progress with Russia and Ukraine in the last two days and will make a decision soon on Ukraine's Temporary Protected Status, while he also said he would like to start denuclearisation talks. Furthermore, President Trump stated if NATO countries do not pay, the US will not defend.
- US presses Ukraine for a quick ceasefire to go with the minerals deal and President Trump demands a tangible path to a truce, according to Bloomberg sources.
- US officials Rubio, Witkoff and Waltz are headed to Riyadh on Tuesday to meet with Ukrainians including Yermak, according to Fox.
- US Treasury Secretary Bessent said won't hesitate on Russia sanctions if needed, while he also stated the Trump administration has kept enhanced sanctions in place and will not hesitate to go 'all in' should it provide leverage in peace negotiations.
- Russian President Putin said Russia will not retreat. It was separately reported that the Kremlin said the speech from French President Macron was confrontational, not the speech of a leader who wants peace.
- Russian Foreign Minister Lavrov said a "solution in Ukraine is possible within weeks if the West stops supporting Kyiv", according to Sky News Arabia.
ASIA-PAC
NOTABLE HEADLINES
- PBoC Governor Pan said they will study and establish new structural policy tools, as well as cut interest rates and banks’ RRR at the appropriate time. Pan added they will prevent FX rate overshooting risk and will expand the relending facility for the tech sector with the relending facility to be increased from CNY 500bln to CNY 800bln-1tln.
- China's Finance Minister said regarding fiscal policy that China has ample policy room in the scenario of possible uncertain factors both external and internal. It was separately reported that China’s Commerce Ministry said they will step up policies to stabilise foreign trade, while China is also considering ending the price cap on unsold home purchases.
- Japan's largest labour union Rengo is seeking a wage hike of 6.09% for 2025 (sought 5.85% in 2024).
EU/UK
NOTABLE HEADLINES
- ECB cut its rates by 25bps, as expected, with interest rates on the deposit facility, the main refinancing operations and the marginal lending facility lowered to 2.50%, 2.65% and 2.90%, respectively, while it stated that "monetary policy is becoming meaningfully less restrictive” (prev. “monetary policy remains restrictive”) and it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. ECB said in particular, rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission and the Governing Council is not pre-committing to a particular rate path.
- ECB President Lagarde (post-meeting statement) said the economy faces continued challenges and last year's growth patterns are continuing into this year, while uncertainty is holding back investment and will weigh on investment by more than expected. Lagarde said in the Q&A regarding the statement language tweak that it is not an innocuous change and word changes have meaning, as well as noted that the ECB is now moving towards a more 'evolutionary approach'. Lagarde also said today's decision was a consensus, and nobody opposed it but ECB's Holzman abstained. Furthermore, Lagarde said if data indicates that a rate cut is appropriate, the ECB will cut, but if the data indicates a pause, it will pause.
- ECB officials see April showdown on whether to cut rates again, according to Bloomberg sources. It was separately reported that the chance of an ECB interest rate cut in April is growing and rates are still likely to fall further with 2.5% unlikely to be the bottom of the cycle, according to Reuters sources. However, four sources also stated that ECB policymakers see a growing chance of a pause in their easing cycle at their next meeting before rates come down again, once they have greater clarity about trade and fiscal policy.
- Germany's lower house is to start discussing debt brake reform on March 13th and is to vote on March 18th, according to Reuters sources.
- BoE's Mann said "Larger cuts, such as the one I voted for in the latest meeting, cuts through this turbulence, with the objective to more effectively communicate the stance of policy and influence the economy", while she added "At the same time, keeping monetary policy restrictive for longer allows me to evaluate developments on inflation persistence. This combination is an activist monetary policy strategy".
DATA RECAP
- UK S&P Global Construction PMI (Feb) 44.6 vs. Exp. 49.5 (Prev. 48.1)
- German HCOB Construction PMI (Feb) 41.2 (Prev. 42.5)
- EU HCOB Construction PMI (Feb) 42.7 (Prev. 45.4)
- EU Retail Sales MM (Jan) -0.3% vs. Exp. 0.1% (Prev. -0.2%)
- EU Retail Sales YY (Jan) 1.5% vs. Exp. 1.9% (Prev. 1.9%, Rev. 2.2%)
