• No dominant market moving story or headlines to guide broader markets today. President Trump’s communication on next steps in the developing (or non-developing) trade negotiations with trading partners are not unequivocal and subject to debate. In an interview with Time, the US President indicates that he expects to conclude trade deals with partners in the next three to four weeks. That of course tells little about the concrete outcome. Communication on talks with China is even more complicated. Chinese officials are denying quotes from the US President that the US and China are engaged in talks on trade. This morning, market saw some positives in headlines that China is considering to exempt some (crucial) goods from the 125% tariff on imports from the US. Question remains whether this is de-escalation or just outright self-interest. The China Politbureau further preparing emergency plans also at least is an ambiguous signal. In the end, market take a cautious wait-and-see approach. The EuroStoxx 50 adds a decent 0.8%. US Indices open little changed. On European interest rate markets the debate on the room and timing of additional ECB easing continues. ECB Holzmann, a notable hawk with the MPC, indicated next policy steps are completely open, but acknowledged that the net impact of tariffs so far is rather disinflationary. However, European interest rate markets have already gone (very? too?) far in anticipating further ECB easing. A 25 bps June cut is fully discounted and with the cycle low seen between 1.50% and 1.75% next year, markets already seen ECB policy in ‘supportive’ territory. Despite these ‘perceived dovish’ comments, German yields today even add between 3.5 bps (2-y) and 1.0 bp (30-y). US yields are easing further. However, contrary to yesterday’s bull steeping on also soft interpretated Fed comments, easing today mainly occurred at the long end of the curve (30-y -5.5 bps, 2-y -0.5 bp). Especially LT yields are testing first support levels (e.g. 4.70/66% for the the30-y, 4.25% area for the 10-y). The fact that the decline is mainly driven by real yields might suggest some easing of underlying stress, at least short-term.
FX markets showed mostly technical trading in the major USD cross rates. DXY is going nowhere in the upper half of the 99 big figure (99.65). Idem for EUR/USD with the pair holding in the 1.13 big figure. At 1.1345, the week low of 1.1308 still isn’t ‘safe’. The dollar also tries to build some ST bottoming against the yen (USD/JPY 143.5 vs correction low just below 140 earlier this week). A more neural risk sentiment and a third consecutive month of ‘remarkably’ solid UK retail sales (March 0.4% M/M vs -0.4% expected and after a strong 0.7% in February) also slightly supported sterling. EUR/GBP is testing recent ST lows near 0.852. For now, we also still mainly see this a technical correction. Next support comes in at 0.8404 (50% retracement Dec 2024 low/April top) and at 0.8474 (previous range top).
.png)
.png)
.png)
.png)
.png)
0 Comments