MACRO ANALYSIS: MNI US Macro Weekly: Optimism Ahead Of US-China Talks

The EU is implied to be included in the US's announcement of a 90-day pause/10% rate, per a White House official cited by Bloomberg - though the article doesn't address the Mexico/Canada ambiguity mentioned earlier: "Countries that were hit with the higher, reciprocal duties that went into effect Wednesday will now be taxed at the earlier 10% baseline rate applied to other nations, with the exception of China, according to a White House official."

• Ex-CEA Chief Economist Ernie Tedeschi makes the following observation, on X.com: "Folks, a 10% broad tariff on everything plus 125% on China, is a 25pp increase in the effective tariff rate, even accounting for USMCA exemptions. That's almost exactly where 2025 tariff policy was this morning. It was just less concentrated on China & more weighted overseas".
• That math checks out, roughly speaking: China represented around 13% of US goods imports in 2024, so every 10% effective increase to the Chinese tariff rate = 1.3pp to the US overall effective import tariff rate. The pullback in the ex-China rate to a blanket 10% (not taking into account sectoral carveouts) for the 87% more or less offsets the 70bop China increase from 54% to 125%.

Bearish - call unwinds and vol sales: 

• -10,000 0QM5 97.00/97.50 call spds, 5.0 ref 96.51 (paper +50K yesterday)
• +12,000 0QJ5 96.25 puts, 0.5 ref 96.56
• -5,000 SFRM5 96.50 calls, 4.5 ref 95.92
• +5,000 SFRJ5 96.00 calls, 2.0 ref 95.92
• -10,000 0QM5 97.00/97.50 call spds, 5.5 ref 96.535
• -4,000 SRH7 96.50 straddles, 120 ref 96.52

• RES 4: 151.30 High Mar 3   
• RES 3: 150.16/151.21 50-day EMA / High Mar 28 and reversal trigger 
• RES 2: 148.74 20-day EMA
• RES 1: 148.18 Low Mar 20 
• PRICE: 144.86 @ 15:44 BST Apr 9
• SUP 1: 143.43 Low Oct 2 ‘24  
• SUP 2: 142.95 1.00 proj of the Feb 12 - Mar 11 - 28 price swing
• SUP 3: 141.65 Low Sep 30 ‘24 
• SUP 4: 141.00 1.236 proj of the Feb 12 - Mar 11 - 28 price swing

USDJPY is trading sharply lower Wednesday, resulting in a break of support at 144.56, the Apr 4 low and bear trigger. This confirms a resumption of the downtrend and maintains the price sequence of lower lows and lower highs. Note too that moving average studies are in a bear-mode position highlighting a dominant downtrend. Sights are on 142.95, a Fibonacci projection. Initial firm resistance to watch is 148.74, the 20-day EMA.