MNI US OPEN - Payrolls & Powell Could Be Next Vol Triggers
EXECUTIVE SUMMARY
- MNI US PAYROLLS PREVIEW - A PULSE CHECK AMIDST TARIFF PESSIMISM
- REPUBLICANS DEBATE HIKING TAX RATE TO 40% FOR MILLIONAIRES
- JAPAN’S ISHIBA CALLS TARIFFS ‘NATIONAL CRISIS’ AS MARKETS SPASM
- SOUTH KOREA COURT OUSTS PRESIDENT YOON, TRIGGERING ELECTION
Figure 1: Russell 2000 enters bear market as equity sell-off deepens
Source: MNI/Bloomberg
NEWS
MNI US PAYROLLS PREVIEW: A Pulse Check Amidst Tariff Pessimism
Nonfarm payrolls are seen increasing a seasonally adjusted 140k in March in the Bloomberg survey after 151k in February. Primary dealer analysts also see 140k whilst the Bloomberg whisper is just 120k despite an uplift after Wednesday’s stronger than expected ADP report. A return of 15k returning strikers and more favorable weather clashes with likely further government layoffs (albeit possibly modest) and broader hiring caution.
US (BBG): Trump Open to Tariff Cuts in Return for ‘Phenomenal’ Offers
President Donald Trump said he was open to reducing his tariffs if other nations were able to offer something “phenomenal,” indicating that the White House was open to negotiations despite the insistence of some top officials. Trump, speaking on Air Force One on Thursday, broadly defended his tariff program despite a stock market meltdown, saying he was happy that interest rates were falling and believed that the economic turbulence would settle. “The tariffs give us great power to negotiate,” Trump said, adding that “every country has called us.”
US (BBG): Republicans Debate Hiking Tax Rate to 40% for Millionaires
Republicans are weighing the creation of a new bracket for those earning $1 million or more to offset some of the costs of their tax bill, a stark departure from decades of GOP opposition to tax increases, according to people familiar with the matter. Deliberations have included a new top rate that would be around 39% to 40%, according to people familiar with the matter, who have requested anonymity to discuss a matter that is still being negotiated.
US (WSJ): Trump Fires Director of National Security Agency
Gen. Tim Haugh, the chief of the National Security Agency, was fired Thursday at the direction of the White House, according to people familiar with the matter. Haugh, who jointly helmed U.S. Cyber Command, the military’s combatant command for offensive use of cyberattacks, was informed by the White House that his services were no longer required, the people said, adding that his civilian deputy at the NSA, Wendy Noble, was also let go.
US/RUSSIA (BBG): Witkoff Meets Putin Envoy in the US as Trump Grows Impatient
US special envoy Steve Witkoff and a Russian negotiator met on Wednesday and Thursday in Washington, days after US President Donald Trump expressed frustration with Vladimir Putin over the lack of momentum on negotiations toward a ceasefire in Russia’s war on Ukraine. The US is now waiting for Kirill Dmitriev, the Russian negotiator, to report back to President Putin before the two sides move forward with any next steps, according to a person familiar with the talks.
US/CHINA (BBG): China, US Make First Military Contact Since Trump’s Inauguration
Chinese and US defense officials had their first known formal contact since Donald Trump returned to the White House. Military officials from the US and China held a maritime safety consultation in Shanghai on Wednesday and Thursday, according to a statement from the navy of the People’s Liberation Army. Both sides discussed measures to improve maritime military safety, the statement released Thursday added.
ISRAEL (BBG): Israeli Army Moves Into North Gaza to Increase Pressure on Hamas
Israel has sent soldiers into parts of northern Gaza, saying it wants to expand a buffer zone there as it escalates operations against Hamas. The Israel Defense Forces began the operation in the area of Shejaiya early on Friday, it said on Telegram. It added that troops destroyed infrastructure and command and control centers belonging to Hamas, an Iran-backed Palestinian militant group.
BOJ (MNI): Tariffs May Change Econ, Price View - BOJ's Uchida
Bank of Japan Governor Kazuo Ueda said on Friday that U.S. tariffs will put downward pressure on the global and Japanese economies but its impact on prices will be varied, and the bank cannot assess currently. The change among external factors will drive the Bank to adjust its economic and price views, and the BOJ will manage monetary policy in an appropriate manner, Ueda told lawmakers. The bank will pay great attention to the impact of the tariffs on domestic and overseas economies in determining monetary policy, he continued. Ueda also said that the possibility is high that the year-on-year rise in rice prices will slow gradually.
JAPAN (BBG): Japan’s Ishiba Calls Tariffs ‘National Crisis’ as Markets Spasm
Japanese Prime Minister Shigeru Ishiba called US tariffs a “national crisis” ahead of a rare meeting with opposition leaders to discuss a unified response, as stocks slumped for a second day and the darkening economic outlook pushed bond yields lower. The shockwave from US President Donald Trump’s announcement of a 24% across-the-board tariff on Japanese imports also prompted Bank of Japan Governor Kazuo Ueda and his deputy to try and convey relative calm as economists pared their forecasts for economic growth.
S.KOREA (BBG): South Korea Court Ousts President Yoon, Triggering Election
A South Korean court removed President Yoon Suk Yeol from office over his ill-fated martial law declaration, paving the way for a presidential race to end a leadership vacuum that has gripped the nation for months. The Constitutional Court’s unanimous ruling Friday immediately stripped Yoon of his powers and set in motion a presidential election to take place within the next 60 days. Right now, Lee Jae-myung, the leader of the main opposition Democratic Party, is leading in polls as the top candidate to succeed Yoon.
INDONESIA (BBG): Indonesia Seeks US Negotiations, Pledges to Ease Trade Barriers
Indonesia pledged to ease trade rules as it seeks to negotiate with the US on the latter’s plan to impose a 32% tariff on products from Southeast Asia’s largest economy. President Prabowo Subianto ordered his cabinet to simplify regulations, including by easing non-tariff barriers, after the US announced the reciprocal tariff on Indonesia, the Coordinating Ministry of Economic Affairs said in a statement on Thursday.
DATA
EUROZONE MAR CONSTRUCTION PMI 44.8; FEB 42.7 (MNI)
GERMANY FEBRUARY FACTORY ORDERS 0.0 % M/M (MNI)
FRANCE DATA (MNI): IP Stronger Than Expected; First M/M Increase Since Aug'24
- FRANCE FEB INDUSTRIAL PRODUCTION +0.7% M/M, -0.4% Y/Y
- FRANCE FEB MANUFACTURING OUTPUT +1.4% M/M, -1.2% Y/Y
France industrial production in February was two-tenths stronger than expected at 0.7% M/M (vs 0.5% consensus) following a weaker than expected reading of -0.5% in January (revised up from -0.6%). This is the first positive sequential reading since August 2024. This also led to the annual figure beating consensus, though still recording a decline of 0.4% Y/Y (vs -1.3% consensus, -1.2% prior revised from -1.6%).
SPAIN FEB INDUSTRIAL PROD 0.7% M/M, -1.9% Y/Y SA (MNI)
UK DATA (MNI): Construction PMI In Line With Consensus, But Still a Concern
- UK MAR CONSTRUCTION PMI 46.4 (FCST: 46.3); FEB 44.6
UK construction PMI picked up a little above last month's low and came in broadly in line with consensus at 46.4 (consensus 46.3, February 44.6). However the details are still disappointing. The press release notes that there is the "lowest business optimism since October 2023", civil engineering contracted at the fastest pace since October 2020 while residential construction contracted further, but at a slower pace than in February (44.7 from 39.3 in Feb).
SWEDEN DATA (MNI): CPIF Ex-Energy a Tenth Softer Than Riksbank Forecast
- SWEDEN FLASH MAR CPIF +2.3% Y/Y
Swedish inflation came in broadly in line with the Riksbank forecast inc energy (but 3 tenths lower than consensus) and a tenth lower ex-energy (two tenths lower than consensus). EURSEK moved to its intraday high, hitting 10.8415 - but the move looks relatively small in comparison to the overnight range. CPIF: 2.3% (consensus 2.6% Y/Y Riksbank forecast 2.34% Y/Y, 2.94% February) CPIF ex-energy 3.0% (consensus 3.2%, Riksbank forecast 3.13%, 3.04% prior February).
SWISS MAR UNEMPLOYMENT RATE +2.8% (MNI)
AUSTRALIA DATA (MNI): Household Spending Close to Forecast - Steady Trend Near 3% Y/Y
Australian Feb household spending data was close to market expectations. The m/m outcome was 0.2% (versus 0.3% forecast and a revised 0.5% gain in Jan). In y/y terms we rose 3.3%, against a 3.2% forecast and prior 3.2% outcome (originally reported as a 2.9% gain). Note this release will replace the retail sales release from June this year. The ABS noted: "In seasonally adjusted, current price terms, household spending increased for five of the nine spending categories. The largest increases were in: recreation and culture (+0.9%), food (+0.6%), hotels, cafes and restaurants (+0.5%)."
FOREX: Markets Wary of Potential Triggers for Further Volatility
- Another day of outsized volatility for asset markets, as the ramifications of Trump's tariff regime continue to reverberate through prices. Asia-Pac equities slipped sharply after the negative Wall Street close, with Japan's Nikkei 225 shedding near 3% and spilling over into the European open. Continental equities are off another 1.5 - 3.0%, with Spanish and Italian equities bearing the brunt.
- For currencies, this is dragging growth-proxies and pressing AUD/USD to new pullback lows. The pair is now within range of 0.6187 support, clearance below which opens the bear trigger at 0.6088.
- There remain two key risks to currency markets at this juncture: a further leg lower for global equity sentiment, or a rebounding dollar.
- Firstly, the Russell 2000 Index closed over 20% below the late '24 high yesterday, thereby entering a bear market - the Stoxx 600 is only 9% off the recent high - meaning a catch-lower in European stocks could further undermine sentiment.
- Secondly, the USD Index is bouncing, recovering over 1% off the lows. The drivers for a potential extension of the rally could lie in both today's NFP report as well as the appearance from Fed's Powell. Should the Fed Chair stress the importance of the inflation mandate over-and-above unpredictable near-term growth pressures, the USD could be squeezed higher still, and provide the next trigger for intraday vols.
- Markets expect gains of 140k for headline payrolls today, with the unemployment rate unchanged at 4.1%. Average hourly earnings are expected to keep pace with last month, raising the focus on unrounded figures.
BONDS: Tariff Shock Continues to Underpin Bonds, EGB Spreads Wider
Bonds remain underpinned as growth worry reverberates in the wake of the “Liberation Day” announcements.
- The growth risks and the ~$7 drop in oil prices seen since the “Liberation Day” tariff announcements continue to lead major traded EUR & GBP inflation measures lower.
- This underscores the idea that markets are more concerned with downside growth risks than any inflationary impetus stemming from the U.S. tariff announcement.
- Bund futures near next resistance (130.88),
- Yields 9.5-13.5bp lower across the German curve, flattening seen, reversing some of yesterday’s steepening move.
- The broader risk-off move promotes further EGB spread widening vs. Bunds, with BTPs nearly 5bp wider on the day at the 10-Year point, set for the widest close seen since January.
- 10-year PGB/Bunds is set for a fresh ’25 closing high, while SPGB/Bunds is testing its own year-to-closing high.
- OAT/Bunds is set for the first close above 75bp since early February.
- For gilts, key resistance at the Mar 4 high in futures (93.79) has been broken, the next upside target of note comes in at the Feb 6 high on a continuation chart (94.35).
- Yields 8-11bp lower, 10s outperform.
- EUR & GBP STIRs continue their dovish repricing, showing ~75bp of cuts through year-end for both the ECB & BoE.
- Cross-markets cues, the latest U.S. NFP release and comments from Fed Chair are set to shape trade ahead of the weekend.
EQUITIES: Eurostoxx 50 Futures Breach Number of Key Supports as Sell-Off Deepens
- Japan's NIKKEI closed lower by 955.35 pts or -2.75% at 33780.58 and the TOPIX ended 86.55 pts lower or -3.37% at 2482.06.
- Across Europe, Germany's DAX trades lower by 469.66 pts or -2.16% at 21282.45, FTSE 100 lower by 136.69 pts or -1.61% at 8356.13, CAC 40 down 124.04 pts or -1.63% at 7477.17 and Euro Stoxx 50 down 102.63 pts or -2.01% at 5014.74.
- Dow Jones mini down 422 pts or -1.03% at 40393, S&P 500 mini down 46.25 pts or -0.85% at 5394.25, NASDAQ mini down 110.25 pts or -0.59% at 18608.5.
Time: 10:25 BST
COMMODITIES: WTI Futures Below Key Support at $64.85
- WTI Crude down $2.5 or -3.73% at $64.6
- Natural Gas down $0.05 or -1.21% at $4.079
- Gold spot down $22.41 or -0.72% at $3084.7
- Copper down $9.9 or -2.05% at $472.6
- Silver down $0.53 or -1.67% at $31.3582
- Platinum down $3.64 or -0.38% at $942.95
Time: 10:25 BST
| Date | GMT/Local | Impact | Country | Event |
| 04/04/2025 | 1230/0830 | *** |  US | Employment Report |
| 04/04/2025 | 1525/1125 | US | Fed Chair Jerome Powell | |
| 04/04/2025 | 1600/1200 | US | Fed Governor Michael Barr | |
| 04/04/2025 | 1645/1245 | US | Fed Governor Chris Waller | |
| 04/04/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 04/04/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 05/04/2025 | 0915/1115 |  EU | ECB's Schnabel At Economy and Finance Workshop |
