BRAZIL: Brazil's Lula Wants Talks With Russia

Is the EU part of the 10% / 90 day pause club? There is a lot of ambiguity in the announcement and Tsy Sec Bessent failed to clarify this (and also added to the confusion with MX and CA, see below). Having announced retaliation vs the US today, the EU could be considered excluded - however unlike China's retaliatory moves which are in place, the EU's retaliatory tariffs only go into effect April 15.

•  And it seems that the main thrust of the announcement is to isolate China.
• So at the moment we (and the markets) are operating under the assumption that the EU is in the 10% / 90 day negotiation window though we await an official announcement.
• Re Mexico and Canada, per BBG's Canada reporter on X.com, @btaplatt: "It's going to take a bit to get clarity on whether any of this affects Canada. In theory it shouldn't, as Canada wasn't included in the reciprocal tariff order. Scott Bessent said yes when asked if Canada/Mexico are at 10% but, uh...we'll have to see whether he misspoke."

• Treasury futures remain near session lows, little react to release of FOMC minutes that note risks to increased inflation and elevated policy uncertainty.
• Focus remains squarely on Pres Trump tweet upping China tariff to 125% while granting 90 day pause for 75 other countries while lowering to reciprocal tariff level to 10%.
• Most notable for Tsys is the swing in curves - from new 3 year highs overnight (2s10s tapped 73.847) to -14.830 flatter at 41.283 at the moment.
• Projected rate hike pricing retreats: current levels vs. this morning  (*) as follows: May'25 at -5.3bp (-11.8bp), Jun'25 at -19.1bp (-34.8bp), Jul'25 at -34.9bp (-58.4bp), Sep'25 -50.2bp (-76.2bp). Year end projection of 75bp total rate cut vs. full point this morning.

• March FOMC minutes notes officials saw risks to inflation and unemployment tilted to the upside amid elevated policy uncertainty, a combination that could lead to "difficult tradeoffs"
• "Participants assessed that uncertainty around the economic outlook had increased, with almost all participants viewing risks to inflation as tilted to the upside and risks to employment as tilted to the downside. Participants remarked that monetary policy was well positioned to address future developments; a restrictive policy could be maintained for longer if inflation were to remain elevated, and policy could be eased if labor market conditions were to deteriorate or economic activity were to weaken."
• Some officials noted the FOMC "may face difficult tradeoffs if inflation proved to be more persistent while the outlook for growth and employment weakened, and several said elevated inflation could prove to be more persistent than expected, the minutes said.
• On the decision to slow QT, only Governor Waller dissented but "several participants did not see a compelling case for slowing the pace of runoff at this meeting."