- US stocks mostly finished higher on what was a choppy session with the major indices ultimately boosted by a soft US CPI report, although the gains were capped as US growth concerns and tariff uncertainty continued to linger heavily in the background after the recent tariff developments and retaliatory announcements. In regards to the data, US CPI was cooler than expected across the board but with the headline largely weighed on by a 4% plunge in airline fares which won’t feed through to the PCE.
- USD was choppy and ultimately eked mild gains despite briefly wobbling on the softer-than-expected CPI data with the knee-jerk selling in the greenback short-lived considering that US tariffs on all steel and aluminium recently took effect with no exemptions, while the CPI report is unlikely to change the Fed narrative going forward since it's only one data point and other macro concerns remain.
- Looking ahead, highlights include Australian MI Inflation Expectations & Building Approvals, Comments from RBA Assistant Governor Jones.
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LOOKING AHEAD
- Highlights include Australian MI Inflation Expectations & Building Approvals, Comments from RBA Assistant Governor Jones.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks mostly finished higher on what was a choppy session with the major indices ultimately boosted by a soft US CPI report, although the gains were capped as US growth concerns and tariff uncertainty continued to linger heavily in the background after the recent tariff developments and retaliatory announcements. In regards to the data, US CPI was cooler than expected across the board but with the headline largely weighed on by a 4% plunge in airline fares which won’t feed through to the PCE.
- SPX +0.49% at 5,599, NDX +1.13% at 19,596, DJI -0.20% at 41,351, RUT +0.14% at 2,026.
- Click here for a detailed summary.
TARIFFS/TRADE
- US President Trump noted the right to adjust tariffs and said April 2nd will be a very big day, while he added there is flexibility on tariffs but there will be very little flexibility once they start. Trump said he will respond to EU counter-tariffs, as well as noted there is still a “massive deficit” which they are going to even out, while he stated that tax policy would stop Ireland and other countries from taking business and they don't want to do anything to hurt Ireland but do want fairness. Furthermore, President Trump also separately commented that they are going to do reciprocal tariffs and that the EU was set up in order to take advantage of the US.
- US President Trump posted on Truth Social that the US is going to take back a lot of what was stolen from it by other countries and by incompetent US leadership, while he added they're going to take back their wealth and take back a lot of the companies that left.
- US Commerce Secretary Lutnick said they are seeking to lower the temperature in talks with Canadian officials on Thursday, while he repeated that auto tariffs are coming on April 2nd and nothing will stop tariffs on steel and aluminium imports until they have a strong US industry. Furthermore, Lutnick said some foreign steel prices will go up and the US will add copper to tariffs.
- US Trade Representative said the EU has rejected US efforts to deal with global excess steel and aluminium capacity, while EU retaliatory tariffs indicate EU's trade and economic policies are "out of step with reality" and EU retaliatory tariffs completely disregard US national security imperatives.
- Canada’s Finance Minister confirmed they will impose 25% retaliatory tariffs on US goods worth CAD 29.8bln from March 13th which will include steel products worth CAD 12.6bln, aluminum products worth CAD 3bln and additional US goods worth CAD 14.2bln. Furthermore, it was stated that additional products affected include computers, sports equipment, and cast iron products, while they will raise the issue of tariffs with European allies to coordinate a response and put pressure on the US. It was also reported that ministers are to visit the US this week and will speak with President Trump's administration with the aim of getting relief from US tariffs.
- Incoming Canadian PM Carney said he is ready to sit down with US President Trump at "the appropriate time" and "when there is respect for Canadian sovereignty".
- Mexican President Sheinbaum declined to respond to US metals tariffs and will wait for the April 2nd deadline after US duties on foreign steel and aluminium supplies took effect.
- UK PM Starmer said the UK is negotiating a trade deal with the US and will keep all options on the table.
- Senior EU Official confirmed they are monitoring to see if Chinese steel overcapacity is re-routed to Europe and they stand ready to take measures where they need to take those measures, according to SCMP.
- Brazil’s Economy Minister Haddad said Brazil is in negotiations with the US and there will be no immediate retaliation to US steel tariffs, while he added that talks have been successful in the past and that Brazil will deal with US tariffs with reciprocity.
- Brazil's Presidential Chief of Staff Costa said Brazilian officials will have a meeting on Friday with the US government to seek an agreement on tariffs, while President Lula will only take a position after that meeting. Furthermore, Costa said the standard of diplomacy is reciprocity, but in this case, the decision will only be taken after the meeting on Friday.
- Global Times tweeted that "China’s Ministry of Commerce and other departments summoned Walmart on Tuesday for reportedly requiring some of its Chinese suppliers to slash prices significantly in an attempt to shift the burden of the US tariffs on China”.
NOTABLE HEADLINES
- US President Trump to announce Bowman as the Fed’s top banking COP nominee, according to Bloomberg.
- US President Trump said the latest inflation numbers are very good news, while it was also reported that the White House said today's CPI report shows inflation is declining and is moving in the right direction under President Trump.
- US President Trump is to meet with Senate Finance Committee Republicans on Thursday, while it was also reported that President Trump is planning to lower taxes if Democrats behave.
- US Senate Republicans are reportedly rejecting House Republican's approach of raising the debt ceiling as part of a tax/border/defence mega bill and Senate Majority Leader Thune (R) told peers it probably can't pass reconciliation, according to Semafor's Everett.
- White House Economic Adviser Hassett said he expects US GDP growth to be 2.0%-2.5% in Q1, according to a Fox News interview.
DATA RECAP
- US CPI YY, NSA (Feb) 2.8% vs. Exp. 2.9% (Prev. 3.0%)
- US Core CPI YY, NSA (Feb) 3.1% vs. Exp. 3.2% (Prev. 3.3%)
- US Cleveland Fed CPI (Feb) 0.3% (Prev. 0.3%)
FX
- USD was choppy and ultimately eked mild gains despite briefly wobbling on the softer-than-expected CPI data with the knee-jerk selling in the greenback short-lived considering that US tariffs on all steel and aluminium recently took effect with no exemptions, while the CPI report is unlikely to change the Fed narrative going forward since it's only one data point and other macro concerns remain.
- EUR marginally softened on what was an indecisive performance which saw the single currency whipsaw back and forth of the 1.0900 level following the bloc's retaliation announcement to US steel and aluminium tariffs, while recent ECB rhetoric provided very little to spur price action.
- GBP gradually advanced but with the upside capped short of the 1.3000 level.
- JPY continued its recent weakening trend but is off today's worst levels after USD/JPY pulled back from a brief foray into 149.00 territory.
- CAD strengthened in the aftermath of the BoC policy announcement in which the central bank cut rates by 25bps as expected and Governor Macklem noted the GC will proceed carefully with any further changes to the policy rate given the need to assess both the upward pressures on inflation from higher costs and the downward pressures from weaker demand, while Macklem also revealed that they discussed pausing rates at 3% ahead of the announcement and are not ruling out an unscheduled rate move if something severe happens suddenly.
- BoC Rate Decision 2.75% vs. Exp. 2.75% (Prev. 3.00%). BoC will be carefully assessing the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. BoC's Macklem said the Governing Council will proceed carefully with any further changes to the policy rate given the need to assess both the upward pressures on inflation from higher costs and the downward pressures from weaker demand. Furthermore, Macklem said they cannot say what effect on inflation a trade war would have and cannot provide forward guidance, while he later stated that the BoC discussed pausing rates at 3% ahead of Wednesday's announcement and are not ruling out an unscheduled rate move if something severe happens suddenly.
- South African Budget stated the government proposed increasing VAT by 0.5ppt from May 1st and by an additional 0.5ppt in 2026.
FIXED INCOME
- T-notes failed to hold on to the post-soft CPI bid with a focus on global trade, while prices failed to benefit from the improved results of the 10yr auction.
COMMODITIES
- Oil prices gained amid a turnaround in recent risk sentiment as cooler-than-expected US CPI supported as well as bullish inventory data, although tariff and growth concerns lingered.
- US EIA Weekly Crude Stocks w/e 1.448M vs. Exp. 2.0M (Prev. 3.614M)
- OPEC MOMR (Mar) stated that global oil demand growth forecasts for 2025 and 2026 remain unchanged at 1.4mln BPD each, while it maintained language that "This robust oil demand growth is expected to continue in 2026".
- Oil exports via the CPC pipeline in February rose 24% M/M to 1.68mln bpd, according to Reuters sources.
- India's Russian oil imports have recovered in March after a three-month decline following US sanctions, according to trading sources and shipping data cited by Reuters.
- Kazakhstan’s Energy Ministry said Kazakhstan is committed to the OPEC+ deal and it continues to work purposefully to fulfil its obligations, while the current quota overrun in February is due to technological processes and they took necessary measures to compensate for temporary increase in production.
GEOPOLITICAL
MIDDLE EAST
- Iran's Supreme Leader Khamenei said US President Trump’s call for negotiation is a deception of public opinion and there is no point talking to the US when we know it won't work, while it was noted that Trump's supposed letter to Iran hasn't reached the Supreme Leader. Furthermore, it was stated that Iran is not after war and US military threats are irrational but Iran is capable of hitting back and will do so if needed, according to state media.
- Iran's Deputy Foreign Minister said trilateral talks between Iran, China, and Russia on developments related to the nuclear issue and the lifting of sanctions will be held in Beijing on Friday.
RUSSIA-UKRAINE
- US President Trump said it is up to Russia now and they have people going to Russia right now, while he added they hopefully can get a ceasefire deal and have got some positive messages on ceasefire. Trump said they can pressure regarding Russia/Ukraine but hope it is not necessary and stated there are things you could do in a financial sense that would be very bad for Russia.
- Ukrainian President Zelensky said the Jeddah meeting between US and Ukrainian officials was constructive and Ukraine is ready to sign a framework minerals deal with the US. Zelensky said the resumption of US military aid and intelligence sharing is very positive, while he said Ukraine supports the US effort to end the war as soon as possible and a 30-day ceasefire will be used to draft a peace plan.
- Russian President Putin said they are likely to eventually agree to a truce with their own terms, according to Bloomberg. Furthermore, sources stated that Russian officials didn’t discuss with their US counterparts the specific deal that the Ukrainian delegation agreed to in Jeddah on Tuesday and the Kremlin finds that framework unacceptable.
- Russian President Putin said Russian troops should defeat the enemy in the Kursk region and completely liberate the region, while Russia's Chief of the General Staff to Putin said Kyiv's plans in Kursk region failed and Ukrainian forces in the Kursk region are surrounded, according to IFX.
- Ukraine's top army commander said Russia is trying to oust Kyiv troops out of the Kursk region and move fighting into Ukrainian border territories, while he added Kyiv will hold defence in the Kursk region as long as necessary.
- Russia's Kremlin expects US National Security Advisor Waltz and Secretary of State Rubio to brief it on details of talks with Ukraine in the coming days, while it added that a potential Russian President Putin and US President Trump call can be organised "very fast".
- US Secretary of State Rubio said will have contact with Russians on Wednesday and that the Russian reaction is not known. It was later reported that the White House Press Secretary said US National Security Adviser Waltz spoke with his Russian counterpart today.
- Turkish President Erdogan said Turkey is ready to host talks if a ceasefire allows Ukraine and Russia to return to the negotiating table.
ASIA-PAC
NOTABLE HEADLINES
- BoJ officials see several reasons against intervening in the bond market even after benchmark yields hit the highest level since 2008, according to Bloomberg sources. Officials are said to be determined not to step into the market unless in the event of extreme moves amid fear of creating thresholds for traders that would impact market functioning.
EU/UK
NOTABLE HEADLINES
- UK Chancellor Reeves delayed the plan to reform Cash ISAs until after the Spring Statement, while officials said the Chancellor was still considering changes, according to the FT.
- ECB President Lagarde said cannot ensure that inflation will always be at 2% but need to set policy so that it converges towards the target.
- ECB's Centeno said the EZ economy remains burdened by higher rates, according to WSJ.
- ECB's Simkus said the direction of travel hasn't changed and it is irrational to commit to future rate decisions, while they will see if the ECB cuts or pauses in April.
- French Central Bank cut its 2025 GDP growth forecast to 0.7% (prev. 0.9%) and cut its 2026 growth forecast to 1.2% (prev. 1.3%), while it maintained its 2027 forecast at 1.3% (prev. 1.3%) and sees HICP inflation of 1.3% in 2025 (prev. 1.6%).
- EU Council President Costa said the German proposal for permanent exemption of defence spending from the EU stability package is realistic.
