MNI ASIA OPEN: Trump Escalates Criticism Of Fed's Powell
MNI (NEW YORK) - Due to holidays, the next Asia Open will be published on Monday April 21 at the US market close
EXECUTIVE SUMMARY
- MNI BRIEF: Trump Continues Attack On Fed's Powell
- MNI ECB WATCH: ECB Cuts 25BP, As Tariffs Add To Risk
- US DATA: April Philly Fed Survey Flashes Recession Signals
MNI INTERVIEW: June BOC Cut Likely After Surprise Hold-Beaudry
NEWS
FED - MNI BRIEF: Trump Continues Attack On Fed's Powell
President Donald Trump on Thursday attacked Fed Chair Jerome Powell for not doing enough to fortify the economy as the effects of tariffs take hold, but stopped short of saying that he currently intends to fire the central banker. "If I ask him to, he'll be out of there," Trump said in a Oval Office press event at the White House. "I don't think he's doing the job. He's too late, always too late. A little slow. And I'm not happy with him. I let him know it and if I want him out he'll be out of there real fast, believe me." (See: MNI INTERVIEW: Fed Needs More Hawkish Message - Emmons)
MNI ECB WATCH: ECB Cuts 25BP, As Tariffs Add To Risk
The European Central Bank cut its benchmark Deposit Rate by 25 basis points on Thursday for a sixth consecutive meeting, bringing it to 2.25% and removing the restrictive label from its policy statement, signalling a new phase characterised by uncertainty. (See MNI SOURCES: ECB Likely To Adjust Or Remove 'Restrictive') “There will be many decisions and many implementations that will take place over the course of next weeks and months that will be decisive … in one direction or the other,” ECB president Christine Lagarde told a press conference on Thursday, noting that it was difficult to know whether the peak of uncertainty had been reached but that the ECB should “stand ready for the unpredictable”.
BOC - MNI INTERVIEW: June BOC Cut Likely After Surprise Hold-Beaudry
The Bank of Canada’s decision to hold interest rates Wednesday makes a reduction more likely at the next meeting in June as the U.S. trade war hobbles the economy, former deputy governor Paul Beaudry told MNI. “I was a bit surprised they didn’t cut,” Beaudry said. “When I listened to what they said, it was very much along the lines that they kind of said last time.”
IMF - MNI: IMF Chief Expects Notable Growth Markdown, Higher Prices
New forecasts by the International Monetary Fund will point to a difficult future for the global economy marked by slow growth and higher inflation, IMF Managing Director Kristalina Georgieva said Thursday, noting the need for strong and independent central banks to protect price stability. "Our new growth projections will include notable markdowns, but not recession. We will also see markups to the inflation forecasts for some countries," she said according to prepared remarks, previewing fresh projections to be released next week for the IMF Spring Meetings in Washington.
FED - MNI BRIEF: Williams - See No Need To Adjust Rates Anytime Soon
Federal Reserve Bank of New York President John Williams said Thursday he sees no need to adjust interest rates "anytime soon," adding monetary policy is in a good place to respond to economic developments. Tariffs will cause higher inflation and slower growth this year, but how long the effects will last is uncertain, he said. "Monetary policy is well positioned. I don't see any need to change the setting of the fed funds rate anytime soon. And it's really about collecting information, understanding better what's happening in the economy during the rest of this year, understanding kind of how the uncertainty plays out," he said in a Fox Business interview.
GERMANY - MNI INTERVIEW: German Defence Employment To 'At Least' Double
Employment related to Germany’s defence industry will at least double to almost a million in the next few years thanks to government plans to exempt substantial defence outlays from the so-called debt brake and to create a EUR500 billion infrastructure fund, the CEO of the Association of the German Security and Defence Industry (BDSV) told MNI.
US TSYS: Curve Bear Steepens With Fed Chair Powell's Future In Focus
The Treasury curve bear steepened Thursday.
- In a holiday-shortened session for cash Treasuries, significant attention throughout was on President Trump's criticism of Fed Chair Powell, setting the tone in an early Truth Social post in which he said "Powell's termination cannot come fast enough".
- This saw a brief steepening of the curve, though the market reaction to multiple headlines on this theme later in the session (Trump telling reporters "If I want [Powell] out, he'll be out of there real fast, believe me") had limited impact.
- Recessionary Philly Fed manufacturing data garnered some attention, as did Trump declaring optimism over trade deals, but the biggest market catalyst of the day was the ECB rate cut decision and communications which put emphasis on growth concerns, triggering a rally in European rates.
- In contrast to the bull steepening seen in Europe, however, Treasury yields would close well off their lows, with bear steepening amid notable weakness at the long end.
- The long-end weakness in turn looked led by higher breakevens (and potentially term premia), possibly linked to concerns over Fed independence.
- Cash closing levels: The 2-Yr yield is up 2.9bps at 3.7982%, 5-Yr is up 3.5bps at 3.9381%, 10-Yr is up 4.8bps at 4.3249%, and 30-Yr is up 5.9bps at 4.798%. In futures: Jun 10-Yr (TY) down 11/32 at 111-02.5 (L: 111-1.5 / H: 111-16)
- Reminder that Treasury markets are closed for holiday Friday. Next week's calendar includes the Fed's Beige Book and flash PMIs.
OVERNIGHT DATA
US DATA: April Philly Fed Survey Flashes Recession Signals
The Philadelphia Fed's Manufacturing Business Outlook Survey general business conditions index fell to -26.4 in April, a much bigger decline than expected (2.2 survey, 12.5 prior). The 38.9 point drop in the index has only been exceeded twice since 2000: October 2008, and March / April 2020 - both recessionary periods.
- The survey as a whole roughly translates to an ISM manufacturing print in the low 40s - deeply contractionary, and an even weaker than the earlier Empire State reading for April which was very weak in its own right. It may over-exaggerate negative sentiment - survey responses were collected from April 7 - 14, so just after the "Liberation Day" reciprocal tariff announcement, and amid the 90 day "pause" announcement on April 9 that may have relieved uncertainty for some manufacturers but increased it for others.
- Weakness was evident across the board: new orders collapsed to -34.2 vs positive 8.7 prior, lowest since April 2020 and outside of that, the worst figure since March 2009 (global financial crisis).
- Employment dropped to 0.2, after a promising 19.7 the prior month. Shipments were -9.1, down from positive 2. All of these are substantially lower than they were just 3-4 months prior.
- Inflationary conditions worsened too: prices paid rose to 51.0 (48.3 prior) for the highest level since July 2022, with prices received up 1 point to 30.7 (just below the recent high).
- If there was any good economic news in the report it is that forward looking expectations have stabilized, with the 6-month ahead outlook rising for the 1st time in 3 months to 6.9 from 5.6 prior - but these are still very subdued levels and may reflect the notion that the outlook can't get much worse.
US DATA: Jobless Claims Solid In April Payrolls Reference Week
Initial claims for the week of April 12 (which is the nonfarm payrolls reference week for April) came in at a joint 11-week low 215k, below the 225k expected and down from 224k prior (upwardly revised 1k). This brought the 4-week average down 2k to 221k.
- Conversely, continuing claims printed 1,855 in the April 5 week, with the 41k rise largely reversing the prior week's 49k drop (1,870k expected, 1,844k prior rev from 1,850k).
- As such, both series remain well within their ranges of the last 6-9 months, suggestive of a labor market that may not be strengthening but likewise is not showing any signs of deterioration.
- There are few signs of rising federal government DOGE-related layoffs in the data either: federal employee initial claims ticked up to 542 (NSA) in the Apr 4 week, up 34 from prior but still well below the 1k+ seen in March weeks; likewise continuing claims fell to an 8-week low.
- Continuing claims are creeping up in the Washington Area (Maryland, Virginia, DC) - by 2k to 55,616 in the April 4 week which is somewhat above the normal trajectory seen in previous years at this time, so could bear watching - however, initial claims in those geographies remain subdued (6.2k in the April 12 week, very typical).
- On a non-seasonally adjusted basis, total initial claims ticked up 3k to 220k, while continuing dropped 35k to 1,951k, with the adjustment not appearing to be out of the ordinary for the respective weeks of the year.
US DATA: Lack Of Momentum For New Residential Construction Activity
March housing starts/permits data were mixed, with the New Residential Construction report pointing in sum to the continuation of subdued activity.
- March housing starts missed expectations by nearly 100k, at 1,324k(1,420k survey/1,494k prior, downward rev from 1,501k - all figures on a seasonally adjusted, annualized basis). Single family starts fell 14% to 940k (1,096k prior), the 2nd lowest figure in the last 2 years (multi-units dipped 3.5% to 384k).
- Building permits - a less volatile (and better leading) indicator of activity - told the opposite story across these categories: total permits rose to 1,482k, beating expectations (1,450k survey/1,459k prior rev from 1,456k), with multi-unit permits at a 4-month high 504k but single-family dipping to a 4-month low 978k.
- On a regional basis, there was a notable advance in permitting in the South, which accounts for over 50% of permits: they hit a 15-month high 830k, joined by a rebound in the West and Northeast but a reversal lower in the Midwest. As with other data, including industrial production and retail sales, there is some suggestion that better weather in the South may have played a factor in March activity.
- In short, residential construction activity continues to trend sideways, with little discernable improvement or deterioration since early 2023. The pickup in permits was somewhat encouraging but remain below levels that prevailed for much of 2022-23, let alone the heights of the pandemic reopening (see chart). The pullback in homebuilder sentiment (per NAHB data) remains a worrying sign for future construction as well.
BONDS: EGBs-GILTS CASH CLOSE: Dovish ECB Drives Bull Steepening
Bunds rose sharply Thursday on the ECB decision, with European curves bull steepening.
- The ECB cut by 25bps as expected, removing the word "restrictive" from the statement (as flagged by MNI sources prior to the meeting).
- The message that downside growth risks have increased drove a sizeable rally in Eurozone rates (MNI's ECB meeting review is here).
- Implied ECB easing through terminal increased by 11bp, and implied probability of a June cut rose to 90% implied (vs 70% prior).
- This drove short-end outperformance, and both the German and UK curves bull steepened on the day.
- Periphery EGB spreads tightened, with semi-core mixed.
- Next week's calendar includes flash April PMIs, and multiple ECB/BoE speakers at the IMF annual meetings in Washington.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 6.2bps at 1.686%, 5-Yr is down 4.2bps at 2.019%, 10-Yr is down 3.7bps at 2.472%, and 30-Yr is down 1.8bps at 2.896%.
- UK: The 2-Yr yield is down 5.4bps at 3.92%, 5-Yr is down 4.9bps at 4.044%, 10-Yr is down 3.7bps at 4.566%, and 30-Yr is down 2.1bps at 5.339%.
- Italian BTP spread down 1.4bps at 117.3bps / French OAT up 0.1bps at 76.5bps
MARKETS SNAPSHOT
Below gives key levels of markets in afternoon NY trade:
- DJIA down 496.44 points (-1.25%) at 39368.63
- S&P E-Mini Future up 11.75 points (0.22%) at 5346.75
- Nasdaq down 27.7 points (-0.2%) at 16361.55
- US 10-Yr yield is up 4.8 bps at 4.3249%
- US Jun 10-Yr futures (TY) are down 10.5/32 at 111-3
- EURUSD down 0.003 (-0.26%) at 1.1352
- USDJPY up 0.54 (0.38%) at 142.59
- WTI Crude Oil (front-month) up $2.04 (3.27%) at $64.66
- Gold is down $28.21 (-0.84%) at $3318.42
Prior European bourses closing levels:
- EuroStoxx 50 down 31.16 points (-0.63%) at 4935.34
- FTSE 100 up 0.06 points (0%) at 8275.66
- German DAX down 105.16 points (-0.49%) at 21205.86
- French CAC 40 down 44.11 points (-0.6%) at 7285.86
US TREASURY FUTURES CLOSE
Current futures levels:
Jun 2-Yr futures (TU) down 1/32 at 103-25 (L: 103-23.8 / H: 103-27.8)
Jun 5-Yr futures (FV) down 3.75/32 at 108-12.25 (L: 108-8.5 / H: 108-19)
Jun 10-Yr futures (TY) down 10.5/32 at 111-3 (L: 111-1.5 / H: 111-16)
Jun 30-Yr futures (US) down 29/32 at 114-12 (L: 114-8 / H: 115-14)
Jun Ultra futures (WN) down 41/32 at 118-13 (L: 118-6 / H: 119-29)
US 10YR FUTURE TECHS: (M5) Gains Considered Corrective
- RES 4: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 3: 112-12 61.8% retracement of the Apr 7 - 11 bear leg
- RES 2: 111-25 50.0% retracement of the Apr 7 - 11 bear leg
- RES 1: 111-17+ High Apr 16
- PRICE: 111-08+ @ 16:32 BST Apr 17
- SUP 1: 110-15/109-08 Low Apr 15 / 11 and the bear trigger
- SUP 2: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
- SUP 3: 108-21 Low Feb 19
- SUP 4: 108-03+ Low Dec 12 ‘24 and a key support
Treasury futures traded higher this week. The climb has resulted in a breach of both the 20- and 50-day EMAs. For now, the latest bounce is considered corrective and the contract is retracing the steep sell-off between Apr 7 - 11. The next resistance to watch is 111-25, 50.0% of the Apr 7 - 11 bear leg. A resumption of weakness would refocus attention on 109-08, the Apr 11 low. A break of this level would resume the downtrend.
SOFR FIXES AND PRIOR SESSION REFERENCE RATES
US TSYS/OVERNIGHT REPO: SOFR Pulls Back After Tax Day
Secured rates pulled back sharply Wednesday April 16, after a pickup on Tuesday that appeared related to large tax payments on the annual mid-April deadline date as well as Treasury auction settlements.
- SOFR, BGR, and TGCR each dropped 5bp. This marked a 17-session low for SOFR to 4.31%, moving it 2bp below effective Fed funds (which was unchanged Wednesday as usual at 4.33%).
REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.31%, -0.05%, $2513B
* Broad General Collateral Rate (BGCR): 4.30%, -0.05%, $1047B
* Tri-Party General Collateral Rate (TGCR): 4.30%, -0.05%, $1016B
New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume: $88B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume: $258B
US TSYS/OVERNIGHT REPO: ON RRP Takeup Remains Subdued
Takeup of the Fed's overnight reverse repo facility ticked up by $3.8B to $58.6B, remaining near Wednesday's post-2021 low level.
- While the ON RRP is seen as something of an auxiliary of bank reserves, we note that reserve holdings as of last week were near multi-year highs close to $3.5T and very much in "abundant" territory so there is nothing here to be concerned about.
- Later on Thursday, we will get the Fed's latest estimate of reserves as of Wednesday - these are likely to show a dip from last week, given the sharp rise in the Treasury General Account amid the April 15 tax deadline ($185B rise Tuesday to just over $600B, a post-February high for the TGA).
BONDS: EGBs-GILTS CASH CLOSE: Dovish ECB Drives Bull Steepening
Bunds rose sharply Thursday on the ECB decision, with European curves bull steepening.
- The ECB cut by 25bps as expected, removing the word "restrictive" from the statement (as flagged by MNI sources prior to the meeting).
- The message that downside growth risks have increased drove a sizeable rally in Eurozone rates (MNI's ECB meeting review is here).
- Implied ECB easing through terminal increased by 11bp, and implied probability of a June cut rose to 90% implied (vs 70% prior).
- This drove short-end outperformance, and both the German and UK curves bull steepened on the day.
- Periphery EGB spreads tightened, with semi-core mixed.
- Next week's calendar includes flash April PMIs, and multiple ECB/BoE speakers at the IMF annual meetings in Washington.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 6.2bps at 1.686%, 5-Yr is down 4.2bps at 2.019%, 10-Yr is down 3.7bps at 2.472%, and 30-Yr is down 1.8bps at 2.896%.
- UK: The 2-Yr yield is down 5.4bps at 3.92%, 5-Yr is down 4.9bps at 4.044%, 10-Yr is down 3.7bps at 4.566%, and 30-Yr is down 2.1bps at 5.339%.
- Italian BTP spread down 1.4bps at 117.3bps / French OAT up 0.1bps at 76.5bps
FOREX: USDCHF Rises 1.15%, Extending Bounce From 10-Year Lows
- Topside momentum for NZDUSD gathered pace on Thursday following a break above the prior 0.5944 highs. The pair has risen as high as 0.5976 as we approach the close, and the latest strength signals scope for a stronger recovery to the Nov 07 high at 0.6038.
- Domestically, Q1 inflation printed higher than expected at 0.9% q/q, bringing the annual rate to 2.5% up from 2.2% in Q4. This may be providing an additional tailwind for NZD today, which remains among the best performers in the G10 FX space.
- Higher US yields have worked against the Swiss Franc and the Japanese Yen. For USDJPY, following a fresh cycle low of 141.62 made overnight, the pair looks set to close around 100 pips off these levels around 142.60. USDCHF stands out on the session, having risen 1.1% to 0.8220. This widens the gap to the most recent cycle lows and key support level, located at 0.8099.
- A late bid for equities on Trump headlines suggesting a good trade deal with China will be found has emphasised the dynamic of supported high beta currencies and pressure on the low yielders.
- The ECB cut rates by 25bps as expected, which had little impact on EURUSD which remains 0.4% weaker on Thursday. However, the likes of EURNZD and EURAUD are showing larger declines, potentially on the back of the governing council acknowledging greater downside risks to growth. Trade tensions are weighing on the ECB view on the euro area economy, seeing it as a potential demand shock increasing downside risk to economic growth, Lagarde said in the policy statement.
- In EM, this is being highlighted best by USDMXN, which has fallen to new post US election lows below 19.75. Lower levels of liquidity could be exacerbating the price action, owing to the local holiday. However, the short-term sentiment surrounding the broader dollar weakening trend appears to be prevailing here.
- The long holiday weekend sees the focus turn to Fedspeak on Tuesday and Eurozone flash PMIs scheduled on Wednesday.
DATA/EVENTS CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 18/04/2025 | 2330/0830 | *** |  JP | CPI |
| 18/04/2025 | 1500/1100 |  US | San Francisco Fed's Mary Daly | |
| 21/04/2025 | - |  EU | ECB's Lagard and Cipollone in IMF/WB Meetings | |
| 21/04/2025 | 1530/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 21/04/2025 | 1530/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 22/04/2025 | 0600/0800 | ** |  SE | Unemployment |
| 22/04/2025 | 1230/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 22/04/2025 | 1230/0830 | ** | US | Philadelphia Fed Nonmanufacturing Index |
| 22/04/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 22/04/2025 | 1330/0930 | US | Philly Fed's Pat Harker | |
| 22/04/2025 | 1400/1000 | ** | US | Richmond Fed Survey |
| 22/04/2025 | 1400/1600 | ** | EU | Consumer Confidence Indicator (p) |
| 22/04/2025 | 1700/1900 | EU | ECB's De Guindos at MIT/ICADE Finance Club | |
| 22/04/2025 | 1700/1300 | * | US | US Treasury Auction Result for 2 Year Note |
| 22/04/2025 | 1800/1400 | US | Minneapolis Fed's Neel Kashkari | |
| 23/04/2025 | 2300/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 23/04/2025 | 2301/0001 | * |  GB | Brightmine pay deals for whole economy |
| 23/04/2025 | 0030/0930 | ** | JP | Jibun Bank Flash Japan PMI |
| 23/04/2025 | 0600/0700 | *** | GB | Public Sector Finances |
| 23/04/2025 | 0630/0730 | GB | DMO remit revision following FY24/25 CGNCR | |
| 23/04/2025 | 0715/0915 | ** |  FR | S&P Global Services PMI (p) |
| 23/04/2025 | 0715/0915 | ** | FR | S&P Global Manufacturing PMI (p) |
| 23/04/2025 | 0730/0930 | ** |  DE | S&P Global Services PMI (p) |
| 23/04/2025 | 0730/0930 | ** | DE | S&P Global Manufacturing PMI (p) |
| 23/04/2025 | 0800/1000 | ** | EU | S&P Global Services PMI (p) |
| 23/04/2025 | 0800/1000 | ** | EU | S&P Global Manufacturing PMI (p) |
| 23/04/2025 | 0800/1000 | ** | EU | S&P Global Composite PMI (p) |
| 23/04/2025 | 0800/1000 | EU | ECB Wage Tracker | |
| 23/04/2025 | 0830/0930 | *** | GB | S&P Global Manufacturing PMI flash |
| 23/04/2025 | 0830/0930 | *** | GB | S&P Global Services PMI flash |
| 23/04/2025 | 0830/0930 | *** | GB | S&P Global Composite PMI flash |
| 23/04/2025 | 0900/1100 | ** | EU | Construction Production |
| 23/04/2025 | 0900/1100 | * | EU | Trade Balance |
| 23/04/2025 | 1030/1130 | GB | BOE's Pill speech at University of Leeds | |
| 23/04/2025 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 23/04/2025 | 1300/0900 | US | Chicago Fed's Austan Goolsbee | |
| 23/04/2025 | 1330/0930 | US | St. Louis Fed's Alberto Musalem | |
| 23/04/2025 | 1330/0930 | US | Fed Governor Christopher Waller | |
| 23/04/2025 | 1345/0945 | *** | US | S&P Global Manufacturing Index (Flash) |
| 23/04/2025 | 1345/0945 | *** | US | S&P Global Services Index (flash) |
| 23/04/2025 | 1400/1000 | *** | US | New Home Sales |
| 23/04/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 23/04/2025 | 1530/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 23/04/2025 | 1700/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 23/04/2025 | 1715/1815 | GB | BOE's Bailey at Institute of International Finance | |
| 23/04/2025 | 1800/1400 | US | Fed Beige Book | |
| 23/04/2025 | 1800/1900 | GB | BOE's Breeden on Monetary Policy and Financial Stability | |
| 23/04/2025 | 1915/2115 | EU | ECB's Lane in panel on Central Bankers' Dilemmas Amid Changing Liquidity | |
| 23/04/2025 | 1945/2145 | EU | ECB's Cipollone in panel on Tokenization and the Financial System | |
| 23/04/2025 | 2230/1830 | US | Cleveland Fed's Beth Hammack |
