All aboard the rollercoaster...

Good morning

More rollercoaster moves as markets still struggle to digest Trump’s tariff decisions. 

European equities had a decent day, closing up around the 5% region, although off the day’s highs.  US markets were not quite so healthy, down around 4% by the London close as Trump announced a 145% tariff on China, up 20% from yesterday’s 125%.  The trade war is not going away.  US equities did finish in negative territory although were a little off the lows.  Asian equities were mixed overnight, Japan’s Nikkei was down 3% but China stocks made it into positive territory.  Futures pricing is indicating a positive start to the European trading day.

US inflation numbers yesterday were softer than expected, headline coming in at 2.4% from 2.5% expected and core slipped to 2.8% against an expected 3%.  USD weakened across the board as thoughts turned once again to possible Fed rate cuts.  Still, the US 10 year yield ticked up towards the 4.5% area overnight, now 4.43%, still there is a suggestions that China are unloading their holdings.

EUR climbed yesterday and again overnight on confirmation they would not be putting retaliatory tariffs in place while Trump’s 90 day pause is in place.  EURUSD touched almost  1.1380 at one point, surpassing the highs seen last September and hitting the highest level since Feb 2022.  GBP also lost ground to the single currency, GBPEUR trading down to 17 month lows around 1.1460 overnight, since recovered a little to 1.1515.  Quite a rollercoaster ride.  GBPUSD ended London around 1.2935 and overnight made further gains against USD seeing a high of 1.3050, this morning’s much better than expected UK GDP release has had little overall impact. 

The weaker USD has seen further USDJPY downside, hitting a low overnight around 142.90, now 143.25.  GBPJPY is just below 187.00, in other crosses it is 2.10, 2.2560 and 25.20 vs AUD, NZD and ZAR.

New records highs have been seen in gold, which moved as high as $3,220.  I wonder whether there is a link between higher gold prices and China selling US treasuries.  Coincidence?  Perhaps.  UBS are looking for further gains in gold this year, targeting at least $3,500. 

Spurs managed to not lose last night, a pretty decent feat at the moment, but they were actually unlucky not to come away with a win, the Frankfurt keeper made several absurdly good saves to keep the scores level.  Man Utd drew 2-2 with Lyon, leaving the English clubs with everything to play for in the second leg.  Chelsea meanwhile strolled to a 3-0 win in their Europa Conference League quarter final, they remain odds-on favourites for the tournament.

A terrific weekend of sport lies ahead.  Liverpool, boosted by the somewhat surprise news that Salah has signed a contract extension, will be hoping to extend their lead In the Premier League table vs West Ham. Spurs will be looking for a second league win in a row against Wolves, though I cannot say I’m confident given Wolves are on a run of good form at the moment. 

In golf, Justin Rose leads the Masters after a first round seven under par.  It would be great to see him win but its far too early to be excited with three rounds still to play.   Veteran Bernhard Langer finished two over par, not bad for a 67 year old.

And we also have the Bahrain F1 GP this weekend, first practice begins today just after midday and the race is 4pm on Sunday.  Despite more nice weather forecast, it would be an ideal weekend to curl up on the sofa and watch sport pretty much day on both Saturday and Sunday.  However I’ll be out and about for a couple of days of 21st birthday celebrations.

Quite a busy week next week data-wise.  The latest China trade data is due in the early hours of Monday morning, a surplus of around $17bn is expected which would put Q1 at around $70bn.  That won’t go unnoticed by Trump.  From the UK we have unemployment numbers Tuesday and inflation Wednesday, while US retail sales and the latest BoC rate decision are also both due Wednesday. 

Wednesday night sees NZ inflation, followed early Thursday morning with Aussie employment numbers.  Then Thursday also brings the latest ECB rate decision where it is thought we’ll see a 25bps cut.  That’s already pretty much priced in, making the Euro’s current strength all the more impressive.  Friday and Monday are Easter bank holidays, if we are allowed to call them that these days. 

Well, its still only Friday morning but I’m pretty much done with the week already.  I’m sure there are many others that feel the same.  Still with 20% of the week still to run I guess I’d better stick around to see what madness ensues today. 

Have a great day, and a great weekend as and when it comes…

-  10.45 ECBs Lagarde speaks

-  13.30 US PPI

-  15.00 Feds Musalem speaks

-  15.00 US Michigan sentiment survey

-  16.00 Feds Williams speaks