It looks like at least we’ve moved past peak fear for now but it doesn’t meant that the coast is clear. The storm clouds are still circling as Trump’s tariffs are due to hit in the next day, with potential for an escalation in trade tensions with China as well. In case you missed it, Trump warned on that overnight:
“Yesterday, China issued Retaliatory Tariffs of 34%, on top of their already record setting Tariffs, Non-Monetary Tariffs, Illegal Subsidization of companies, and massive long term Currency Manipulation, despite my warning that any country that Retaliates against the U.S. by issuing additional Tariffs, above and beyond their already existing long term Tariff abuse of our Nation, will be immediately met with new and substantially higher Tariffs, over and above those initially set. Therefore, if China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th. Additionally, all talks with China concerning their requested meetings with us will be terminated!”
For the time being, we’re seeing market players catch a slight breather. S&P 500 futures are up 0.9% with 10-year Treasury yields keeping steadier around 4.14%. On the latter, it’s still hard to get a gauge to what extent we saw liquidations to meet margin requirements and what not. But do keep an eye out for the Treasury auctions tomorrow and on Thursday for a read on that.
In FX, we’re seeing the dollar trade lower on the day after the gains overnight. EUR/USD is up 0.5% to 1.0965 while GBP/USD is recovering after the plunge in the past two days to be up 0.4% to 1.2770 currently. Meanwhile, AUD/USD is also marked up by 1% to 0.6045 at the moment.
It’s all still early in the day though with plenty of headline risks surely still to come especially in US trading later. For now, I guess we can afford a bit of a breather with little on the agenda in Europe as well.
0645 GMT – France February trade balance data1000 GMT – US March NFIB small business optimism index
That’s all for the session ahead
