MACRO OUTLOOK: MNI US Macro Weekly: Here Comes The Hard Part
Apr-11 21:11
We've just released our weekly US Macro publication - click here for PDF
- Tariff-driven volatility in policy, macro and markets continued this week, punctuated by President Trump’s surprise announcement of a 90-day pause on the reciprocal tariffs he announced on April 2, imposing a flat rate of 10% on most partners while simultaneously hiking tariffs on China to 145%.
- The data in the week was something of a sideshow in comparison, but if anything it showed that prior to the tariff escalation, the economy was on track for something resembling a “soft landing”.
- March's main CPI aggregates all surprised lower, with a notable below-expected supercore the lowest since Mar 2021, and producer prices likewise coming in soft.
- And while Q1 GDP is still tracking to be weak (negative, per Atlanta Fed GDPNow), “hard” data continue to defy recessionary fears, including the latest weekly jobless claims.
- But as March turns into April, these data points are becoming stale as we could see a sharp shift in both the hard and the soft data. The UMichigan April survey of consumers was stark in this regard, showing the weakest sentiment and highest inflation expectations in 4 decades.
- Fed officials suggested that upside risks to inflation and downside risks to growth had increased versus their pre-tariff announcement assessments, arguing for a patient approach on rate cuts.
- The market reaction to recent events and data has been notable: for the week, the S&P 500 rebounded sharply, long-end Treasury yields soared (10Y Tsys by the most in any week since 2001), and the dollar fell sharply. The implication is that foreign investors are beginning to shun US assets given tariff-related uncertainty, adding further complexity to the macro outlook.
- Looking ahead to next week, March retail sales (Wednesday) is the key data release: it’s expected to show a large seque
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ASIA: Coming Up In Asia Pac Markets On Thusday
Mar-12 21:09
| 2145GMT | 0545HKT | 0845AEDT | New Zealand Jan Net Migration |
| 2350GMT | 0750HKT | 1050AEDT | Japan Offshore Weekly Inv Flows |
| 0000GMT | 0800HKT | 1100AEDT | Australia March Inflation Expectations |
| 0001GMT | 0801HKT | 1101AEDT | UK Feb RICS House Pirce Balance |
| 0135GMT | 0935HKT | 1235AEDT | New Zealand Bond Sale |
| 0230GMT | 1030HKT | 1330AEDT | Australia RBA Jones On A Panel |
USDCAD TECHS: Remains Above Last Week’s Low
Mar-12 21:00
- RES 4: 1.4793 High Feb 3 and key resistance
- RES 3: 1.4700 Round number resistance
- RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 1: 1.4473/4543 High Mar 10 / 4 and a bull trigger
- PRICE: 1.4406 @ 14:59 GMT Mar 12
- SUP 1: 1.4242 Low Mar 6
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
The bull cycle in USDCAD that started Feb 14 remains in play for now, and recent weakness appears corrective. The pair has recovered from its Mar 6 low and a continuation higher would signal scope for a test of the short-term bull trigger at 1.4543, the Mar 4 high. On the downside, support to watch lies at 1.4242, the Mar 6 low. A break of this level would instead expose key short-term support at 1.4151, the Feb 14 low.
BOC: MNI BoC Review-March 2025: Trade War Tradeoffs
Mar-12 20:50
We've just published our review of March's Bank of Canada meeting - Download Full Report Here, including a summary of sell-side analysts' reviews of the decision and press conference.
- The Bank of Canada (BoC) cut at the seventh consecutive meeting in March, by 25bp to an overnight rate target of 2.75%, in line with analyst consensus and market pricing.
- The 225bp of easing since June brings rates to what Governor Macklem characterized as the middle of the “neutral” range, putting policy in a finely poised position with the escalating trade war between Canada and the U.S. looming large over the economic outlook.
- Overall the press conference leaned marginally hawkish, as Macklem was if anything more emphatic on the need to keep inflation / inflation expectations under control.
- There was no post-meeting change in analyst expectations for the rate path ahead, with overwhelming consensus for a terminal rate of 2.25% (two more 25bp cuts), in line with market pricing. But those views are very much contingent on trade developments – and much could change between now and the Apr 16 decision.
