- US stocks were mixed with risk sentiment choppy to start the week in which US equity futures were initially hit and T-notes supported following reports over the weekend that President Trump is pushing senior advisors to go big on tariffs, while a turnaround was seen after the Chicago PMI data topped all analysts’ forecasts and with month/quarter-end also at play. As such, T-notes then retreated from highs and equities rebounded from lows, while oil prices rallied as participants digested recent threats by US President Trump to bomb Iran if they do not make a nuclear deal and to impose secondary tariffs on Russian oil over the war in Ukraine.
- USD was firmer in a choppy session as participants braced for ‘Liberation Day’ scheduled mid-week with the White House Press Secretary noting that Trump's tariffs will end unfair trade practices and the rest of the world will feel what the US public has felt, while she added that Trump is committed to sectoral tariffs and any country that has treated the US unfairly should expect to receive a tariff. However, administration sources said that Trump is still deciding which plan he will take for reciprocal tariffs and has been presented with "multiple" tariff plans. There was also some rhetoric from Fed officials in which Williams and Barkin both said it makes sense to wait and assess the impact of tariffs before acting on policy, while the data highlight was the strong Chicago PMI print which helped support the turnaround in risk sentiment.
- Looking ahead, highlights include Australian Manufacturing PMI & Retail Sales, Japanese Unemployment Rate & BoJ Tankan Survey, South Korean Trade Data, Regional PMIs, Chinese Caixin Manufacturing PMI, RBA Rate Decision & Governor Bullock's Post-Meeting Press Conference.
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LOOKING AHEAD
- Highlights include Australian Manufacturing PMI & Retail Sales, Japanese Unemployment Rate & BoJ Tankan Survey, South Korean Trade Data, Regional PMIs, Chinese Caixin Manufacturing PMI, RBA Rate Decision & Governor Bullock's Post-Meeting Press Conference.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were mixed with risk sentiment choppy to start the week in which US equity futures were initially hit and T-notes supported following reports over the weekend that President Trump is pushing senior advisors to go big on tariffs, while a turnaround was seen after the Chicago PMI data topped all analysts' forecasts and with month/quarter-end also at play. As such, T-notes then retreated from highs and equities rebounded from lows, while oil prices rallied as participants digested recent threats by US President Trump to bomb Iran if they do not make a nuclear deal and to impose secondary tariffs on Russian oil over the war in Ukraine.
- SPX +0.55% at at 5,612, NDX -0.02% at 19,278, DJI +1.00% at 42,002, RUT -0.56% at 2,012.
- Click here for a detailed summary.
TARIFFS/TRADE
- 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, while sources said Trump will likely not make the decision on which plan he takes until right before April 2nd or on the morning of April 2nd.
- White House Press Secretary Leavitt said Trump's tariffs will end unfair trade practices and the rest of the world will feel what the US public has felt, while she added that Trump tariffs will ensure reciprocity and that Trump is also focused on continuing tax cuts, according to Fox News. Furthermore, she stated there will be a Rose Garden event on Wednesday for the Trump tariff plan and that Trump is committed to sectoral tariffs, while the White House spokesperson said no exemptions at this time when asked about tariff exemptions for farmers and any country that has treated the US unfairly should expect to receive a tariff.
- UK PM Starmer's spokesperson said he expects the UK will be impacted by US tariffs this week and talks on a new US economic deal will likely continue past Wednesday.
- China, Japan, and South Korea reached a consensus that the three sides will jointly respond to US tariffs, according to state media. Japan and South Korea are seeking to import semiconductor raw materials from China, and China is also interested in purchasing chip products from Japan and South Korea, while they have a consensus that they hope to keep the supply chain smooth in these areas.
NOTABLE HEADLINES
- Fed’s Williams (voter) said it is early days in figuring out the impact of tariffs and there is still a lot of uncertainty about tariffs, while he added the details matter and will need to watch the data to measure the impact of tariffs. Williams also stated that the full impact of tariffs can play out over a long horizon and that tariffs will impact prices.
- Fed's Barkin (2027 voter) said it's going to take a while before we get clarity on the tariff impact, while he added to cut rates you need confidence in inflation and the higher the inflation numbers, the less likely you'll see that, according to a CNBC interview. Barkin stated that suppliers are emboldened and they will have to pass on higher prices, while consumers noted they are tired of paying higher prices. Furthermore, Barkin said he is not convinced higher prices won't be passed on, or that there won't be inflation and stated data right now is okay but there is a risk on the employment side.
- US President Trump is reportedly planning to travel to Saudi Arabia in May, according to Reuters citing sources.
- White House reportedly discussed providing support to farmers as the President escalates the trade war, according to NYT.
- White House considers executive order to fast-track permitting for deep-sea mining in international waters, according to Reuters sources.
DATA RECAP
- US Chicago PMI (Mar) 47.6 vs. Exp. 45.4 (Prev. 45.5)
- US Dallas Fed Manufacturing Bus Index (Mar) -16.3 (Prev. -8.3)
FX
- USD was firmer in a choppy session as participants braced for ‘Liberation Day’ scheduled mid-week with the White House Press Secretary noting that Trump's tariffs will end unfair trade practices and the rest of the world will feel what the US public has felt, while she added that Trump is committed to sectoral tariffs and any country that has treated the US unfairly should expect to receive a tariff. However, administration sources said that Trump is still deciding which plan he will take for reciprocal tariffs and has been presented with "multiple" tariff plans. There was also some rhetoric from Fed officials in which Williams and Barkin both said it makes sense to wait and assess the impact of tariffs before acting on policy, while the data highlight was the strong Chicago PMI print which helped support the turnaround in risk sentiment.
- EUR marginally softened with the single currency not helped by mixed data from Germany in which Retail Sales topped forecasts and German CPI slowed, while the bloc braces for incoming US tariffs.
- GBP trickled lower and briefly dipped beneath the 1.2900 handle before bouncing off lows, while there were comments from UK PM Starmer's spokesperson who noted expectations the UK will be impacted by US tariffs this week and that talks on a new US economic deal will likely continue past Wednesday.
- JPY pared some of its recent gains in which USD/JPY bounced back from beneath the 148.00 handle and reverted to near the 150.00 territory.
FIXED INCOME
- T-notes pared nearly all of their early gains as risk sentiment improved following strong Chicago PMI data.
COMMODITIES
- Oil prices saw firm gains to start the week with punchy geopolitical comments from US President Trump supporting the upside.
- Petrobras (PBR) CEO said the firm is lowering the price of diesel by 4.6% and will lower jet fuel prices which will be announced on Tuesday.
- CPC received an order from Russia's Rostransnazdor to temporarily halt the operation of two remote mooring points, according to Interfax.
GEOPOLITICAL
MIDDLE EAST
- Israel is to reoccupy 25% of Gaza to press Hamas to release hostages, according to Axios.
- Israeli security source said Egypt's military buildup in the Sinai Peninsula is a potential violation of the peace agreement and stated that "Egypt has deployed forces beyond the permitted quota, expanded port facilities, and extended runways at the airport”.
- IRGC seized two foreign tankers carrying over three million litres of smuggled diesel fuel, according to state media.
- US President Trump said the Iran-backed Houthi terrorists have been decimated by the relentless strikes over the past two weeks and attacks will continue until they are no longer a threat to freedom of navigation. Trump added that "The choice for the Houthis is clear: Stop shooting at U.S. ships, and we will stop shooting at you. Otherwise, we have only just begun, and the real pain is yet to come, for both the Houthis and their sponsors in Iran".
- Houthi media reported US aggression on Kamaran Island in Hodeidah, Yemen with two raids, according to a translated Al Jazeera post on X.
RUSSIA-UKRAINE
- Russia's Kremlin said regarding US President Trump's frustration with Russian President Putin, that Russia continues to work on building bilateral relations and on Ukraine settlement ideas, while it added that there is no Trump-Putin call scheduled for this week so far. Kremlin stated that Putin remains open to contact with Trump and a conversation can be arranged as needed, as well as noted that US firms have shown interest in rare earth projects in Russia, but this is still in the early stages. Furthermore, the Kremlin said President Putin will receive China’s Foreign Minister Wang.
- Russia's Defence Ministry said Ukraine continues attacks on Russia's energy infrastructure, according to IFAX.
- G5+ Foreign Ministers said they are willing to exert more pressure on Russia including new sanctions, while they stated that Russian assets must remain frozen until Russia has ended the war and compensated Ukraine.
ASIA-PAC
NOTABLE HEADLINES
- China's Politburo held a meeting on Monday and discussed supervision over environmental protection work, according to Xinhua.
- China will establish a "seriously discredited entities list" in the real estate, internet, human resources markets, and medium to long-term energy contacts sectors, while it will restrict or ban those on the list from issuing stocks and bonds, as well as promote cross-border credit data flow on the premise of ensuring security.
- Chinese Vice Premier He Lifeng said China welcomes international investors to actively participate in the building of China's capital markets and share development opportunities, according to Xinhua.
- PBoC said it did not buy or sell Chinese sovereign bonds in March on the open market and conducted CNY 800bln of outright reverse repos in March.
- US sanctioned six Chinese and Hong Kong officials over actions to erode Hong Kong's autonomy.
- BoJ cut the amount across its monthly bond purchases in its quarterly plan in which it intends to buy JPY 135bln in 10-25yr JGBs three times (prev. JPY 150bln, three times), JPY 300bln in 5-10yr four times (prev. JPY 325bln four times), JPY 275bln in 3-5yr four times (prev. JPY 300bln four times), JPY 275bln in 1-3yr four times (prev. JPY 300bln four times) and JPY 100bln in up to 1yr once (prev. JPY 150bln once)
- Japan's Government Pension Investment Fund maintained asset allocation targets in its portfolio with domestic stock allocation kept at 25% and overseas stock allocation kept at 25%.
EU/UK
NOTABLE HEADLINES
- ECB's Lagarde said Europe must take better control of its own destiny and they are almost at the inflation target, while she added inflation needs to come down in a durable manner and requires an interest rate which is carefully set. Lagarde added that Trump tariffs would lower EZ growth by at least 0.3 percentage points.
- ECB's Panetta said the fight against inflation cannot be considered to be over and must monitor all factors that could hinder a return to the 2% target.
- More ECB officials appear ready to accept an April rate pause, although several ECB officials are still wavering on whether to cut interest rates next month, suggesting the meeting remains far more open than investors are betting, according to Bloomberg sources.
- French RN official Le Pen has been found guilty in the EU embezzlement case and will be subject to an election ban for 5 years, while she received a four-year sentence with two suspended and two to be spent with her movements controlled by an electronic bracelet.
- Brazil's Finance Minister Haddad said the EU-Mercosur agreement offers little advantage for Mercosur and its value is mostly political.
DATA RECAP
- German Retail Sales YY (Feb) 4.9% vs. Exp. 3.1% (Prev. 2.9%)
- German CPI Prelim MM (Mar) 0.3% vs. Exp. 0.4% (Prev. 0.4%)
- German CPI Prelim YY (Mar) 2.2% vs. Exp. 2.2% (Prev. 2.3%)
- German HICP Prelim MM (Mar) 0.4% vs. Exp. 0.5% (Prev. 0.5%)
- German HICP Prelim YY (Mar) 2.3% vs. Exp. 2.4% (Prev. 2.6%)
