US: Lutnick Talks On Tariffs Amid Autos Reprieve
Secretary of Commerce Howard Lutnick has been speaking on CNBC regarding tariffs, trade and the US economy. Lutnick: "Tariff reprieve not likely just about automakers, [it is] likely to include all USMCA-covered products." Confirms the reprieve is for one month. Lutnick: "Hopefully, we will announce the full USMCA reprieve today."
- On reciprocal tariffs Lutnick says that they will come in on 2 April. Lutnick says "Hopefully by 2 April, Mexico and Canada will have done enough on fentanyl that this part of the conversation is over and it will just be about reciprocal tariffs...My expectation is that 2 April reciprocal tariff rates start high and then start coming down."
- Lutnick says that he thinks "over 50%" of Canadian and Mexican products are USMCA compliant, but admits it is an 'off the cuff' estimate.
- Lutnick calls claims that the president's advisers do not know what he is thinking 'silly'.
- Commerce secretary talks up massive re-shoring of jobs to US.
- Lutnick: 'We are on it, we are going to fix it, we are going to make it fair...we are going to stop these tax scams' - specifically calls out Ireland for its sizeable presence of US tech firms, and Liberia and Panama regarding shipping registrations.
As noted in our US Daily Brief, "The autos decision appears to suggest that Commerce Secretary Howard Lutnick is the Trump advisor with the most clout over Trump’s trade policy, at least for now. Lutnick’s interviews with Fox News and Bloomberg Television teased the decision ahead of the official announcement."
- CNBC also confirms Treasury Sec Scott Bessent will be on tomorrow at 0700ET/1200GMT/1300CET.
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US DATA: Softer Durables Revisions Don't Dispel Positive End-2024 Momentum
Factory orders were slightly disappointing in December, contracting by 0.9% M/M (0.1pp more than expected), with November's revised down 0.4pp to -0.8%. The ex-transport orders figure was better however, showing growth of 0.3% vs 0.2% in Nov. The durable and capital goods components of the report were little changed from the advance release (overall durables orders -2.2% unch, ex-transport 0.3% unch, core cap goods orders up 0.4% vs 0.5% advance / core cap goods shipments up 0.5% vs 0.6% advance).
- While this was a 4th contraction in 5 months for factory orders, with momentum appearing to slip again (3M/3M SAAR at -3.1%, weakest since March 2024) and the level of orders below mid-2023 levels, overall we continue to see green shoots for manufacturing. That's evident in the ex-transport orders figure which remains heavily influenced by volatile components such as aircraft (-45.7% M/M, which looks largely due to poor Boeing net orders).
- It's also evident in the durable goods orders, even if the downward revisions show slightly less momentum than previously thought. Core capital goods rising 3.3% 3M/3M SAAR (3.8% pre-revision) with shipments up 2.4% (3.0% pre-revision) and both categories rising Y/Y suggests improving dynamics.
- Survey data, including this week's expansionary ISM for January (with strong New Orders), continue to point to a stabilizing manufacturing sector going into 2025, and the durable goods orders/shipments provide some of the initial "hard" data pointing in a similar direction.
- Of course there are countervailing risks, including on tariffs (which may actually have helped boost factory numbers in late 2025 amid front-running), but overall the data bode well for business capex going into 2025 amid signs the broader economy could be regaining some momentum.
BUNDS: A limited impact from the US Data
- An initial gain for Bund on the US headline misses, but overall a mixed set of Data, Bund gained 10 ticks, but back down blow the 133.00 figure.
- Technicals are unchanged, support is still at 131.34 (Monday's gap), and resistance comes at 133.58.
