MNI US OPEN - Trump Floats Substantial Cut to China Tariffs
EXECUTIVE SUMMARY
- TRUMP FLOATS CUTTING CHINA TARIFFS ‘SUBSTANTIALLY’ IN TRADE DEAL
- TRUMP SAYS HE HAS 'NO INTENTION' TO FIRE POWELL
- LONDON TALKS DOWNGRADED; TRUMP PEACE PLAN GIVES RUSSIA NOTABLE 'WINS'
- TARIFF-RELATED IMPACTS APPARENT ACROSS GERMAN PMI SECTORS
Figure 1: Latest ECB wage tracker consistent with softening compensation expectations
NEWS
MNI US EARNINGS SCHEDULE: Staples & Healthcare in Focus
Healthcare and consumer staples take the focus from financials in the coming holiday-shortened week. Key reports include Tesla, IBM, Alphabet, Procter & Gamble and Abbvie. This makes for a busy week, with over 20% of the S&P 500’s market cap set to report. Markets will be particularly focused on any signs of front-loading corporate purchases ahead of expected tariffs, the rate at which firms will passthrough costs to the consumer, and the expected impacts of tariffs on the bottom-line for consumer staples.
US/CHINA (BBG): Trump Floats Cutting China Tariffs ‘Substantially’ in Trade Deal
President Donald Trump said he plans to be “very nice” to China in any trade talks and that tariffs will drop if the two countries can reach a deal, a sign he may be backing down from his tough stance on Beijing amid market volatility. “It will come down substantially but it won’t be zero,” Trump said Tuesday in Washington, following earlier comments from Treasury Secretary Scott Bessent that the standoff was unsustainable. Trump added that “we’re going to be very nice and they’re going to be very nice, and we’ll see what happens.”
US (MNI): Trump Says He Has 'No Intention' to Fire Powell
President Donald Trump said Tuesday he does not intend to fire Federal Reserve Chair Jerome Powell, but again complained about interest rates being too high and said the central bank should preemptively cut rates. Asked about firing the Fed chair, Trump said: "I don't want to talk about that because I have no intention of firing him," at a swearing-in of the new Securities and Exchange Commission chair, Paul Atkins. "None whatsoever. Never did."
US (WaPo): Trump’s Inner Circle Weighs Push for Higher Taxes on Millionaires
President Donald Trump's inner circle is weighing whether the White House should back raising taxes on Americans earning more than $1 million per year as part of the GOP's 2025 tax legislation, according to two administration officials and three other people briefed on the matter. While the prospect of a tax hike has gotten a largely chilly reception among Republicans on Capitol Hill, Vice President JD Vance and budget director Russell Vought have expressed openness to the idea in internal administration deliberations and are viewed as supportive, said the people, who spoke on the condition of anonymity to describe private talks.
US (BBG): Musk to Refocus on Ailing Tesla With DOGE Work ‘Mostly Done’
Elon Musk vowed to pull back “significantly” from his work with the US government to concentrate on Tesla Inc., easing concerns of investors who lamented his time in Washington as a distraction. The chief executive officer will devote “far more of my time to Tesla” beginning next month, saying Tuesday that his stint leading the Department of Government Efficiency will be largely complete.
US (WSJ): Credit-Card Companies Brace for a Downturn
The largest credit-card companies are preparing for the economy to get worse. An economic downturn could mean more customers can’t pay their bills, and banks and credit card companies are trying to get ahead of it, according to their latest earnings reports. Already, delinquencies are rising and are now in line with levels from before the pandemic. JPMorgan Chase and Citigroup added money to their rainy day funds to cover expected future losses. Retail-card issuer Synchrony is tightening its lending standards. U.S. Bancorp is chasing a more affluent customer base that could better withstand a downturn.
FED (MNI): Steady Rate Until Inflation Risks Ebb - Kugler
The Federal Reserve should keep interest rates on hold at current levels until the looming threat of higher inflation, including from tariff policies, abates, Fed Governor Adriana Kugler said Tuesday. "I will support maintaining the current policy rate for as long as these upside risks to inflation continue, while economic activity and employment remain stable. I remain committed to achieving both of our dual-mandate goals of maximum employment and stable prices," Kugler said in prepared remarks.
US/IRAN (BBG): Iran Says US Talks on ‘Right Track’ and ‘Good Deal’ is Possible
Iranian Foreign Minister, Abbas Araghchi, said negotiations with the US are on the “right track” and a nuclear agreement could be within reach if the Trump administration doesn’t make “unrealistic demands,” the semi-official Mehr news agency reported. Araghchi was speaking during a visit to China, which is involved in a parallel diplomatic effort to resolve a years-long standoff between Iran and the US over Tehran’s nuclear program.
US/UK (WSJ): U.S. Prepares Negotiating Terms for U.K. Trade Talks
The U.S. is preparing its terms for trade negotiations with the U.K., according to people familiar with the plans, aiming for London to reduce levies and other non-tariff barriers on a variety of U.S. goods. The U.S. will aim for the U.K. to reduce its automotive tariff from 10% to 2.5%, according to people with knowledge of a draft document the Trump administration circulated to stakeholders this week outlining goals for trade talks with the U.K. Washington will also push the U.K. to relax rules on agricultural imports from the U.S., including beef, and revise rules of origin for goods from each nation, the people said, among other aims.
UKRAINE (MNI): London Talks Downgraded; Trump Peace Plan Gives Russia Notable 'Wins'
Peace talks will take place today in London involving officials from the UK, US, Ukraine, France and Germany. The meeting had initially been intended as a summit of foreign ministers, but on 22 April the US State Dep't confirmed that Secretary of State Marco Rubio would not be able to attend due to 'logistical reasons'. White House Middle East envoy Steven Witkoff is also skipping the talks. In their stead, Keith Kellogg, President Donald Trump's envoy for Ukraine, will represent the US. Without Rubio, the meeting has been downgraded to a closed-door discussion among security officials. The lack of high-level representation from the US could be indicative of the US' disinterest in having European countries pushing for Ukraine's interests to be taken into account, as this could hold up progress of discussions.
BOJ (MNI): BOJ Warns Banks to Watch Risks
Japan's financial institutions should monitor various risks, despite the nation's financial system largely maintaining stability, the Bank of Japan’s Financial System Report on warned on Wednesday. “Since the beginning of April, financial markets at home and abroad have fluctuated significantly, while uncertainty has heighted regarding the formulation of trade and other economic polices in each jurisdiction, geopolitical risks, and developments in global financial markets,” the FSR said.
CORPORATE (BBG): Intel to Announce Plans This Week to Cut Over 20% of Staff
Intel Corp. is poised to announce plans this week to cut more than 20% of its staff, aiming to eliminate bureaucracy at the struggling chipmaker, according to a person with knowledge of the matter. The move is part of a bid to streamline management and rebuild an engineering-driven culture, according to the person, who asked not to be identified because the plans are private. It would be the first major restructuring under new Chief Executive Officer Lip-Bu Tan, who took the helm last month.
INDONESIA (BBG): Indonesia Holds Key Rate to Back Rupiah, Will Keep Intervening
Indonesia’s central bank maintained its key interest rate, extending a pause in its easing cycle to stabilize the currency in the face of a worsening global trade war. Bank Indonesia left the benchmark BI-Rate unchanged at 5.75% on Wednesday, as predicted by 27 of 29 economists surveyed by Bloomberg. The remainder expected a quarter-point cut. It’s the third month in a row that the central bank has held rates steady after a surprise reduction in January.
DATA
EUROZONE DATA (MNI): Weak France and Germany Weigh on EZ April Flash Services PMI
- EUROZONE FLASH APRIL MANUF PMI 48.7 (FCAST 47.4, MAR 48.6)
The Eurozone-wide services PMI was 49.7 (vs 50.5 cons, 51.0 prior). While the miss was expected given the weaker-than-expected French and German data earlier this morning, the smaller deviation from consensus (compared to FR/GE) suggests the EZ ex-France and Germany was a little better than expected.
GERMANY DATA (MNI): Tariff-Related Impacts Apparent Across Sectors
- GERMANY FLASH APRIL MANUF PMI 48.0 (FCAST 47.6, MAR 48.3)
The German April flash PMI was weaker than expected at 48.8 (vs 50.2 cons, 50.9 prior). This was the first contractionary reading since November 2023, and the lowest since February 2024. Taken alongside the soft French services reading, the Eurozone-wide print is set to miss expectations of 50.5. The manufacturing index softened a touch to 48.0 (vs 47.6 cons, 48.3 prior), implying a slightly contractionary composite reading of 49.7 (vs 50.5 cons, 51.3 prior). Tariff-related impacts are apparent, with services firms suffering from heightened uncertainty and manufacturers citing order frontloading and stock building.
FRANCE DATA (MNI): Slowdown in New Export Order Declines a Relief
- FRANCE FLASH APRIL MANUF PMI 48.2 (FCAST 47.9, MAR 48.5)
The French flash April services PMI was weaker than expected at 46.8 (vs 47.6 cons, 47.9 prior). Although still above February's 45.3 reading, the services index has been in contractionary territory for the last eight months. Manufacturing was a little better than expected at 48.2 (vs 47.9 cons, 48.5 prior), but has been below 50 for 27 months now. The composite reading was thus weaker than expected at 47.3 (vs 47.8 cons, 48.0 prior). Services new orders fell sharply, particularly for domestic markets. Given the
current tariff-related uncertainty, the slowdown in the decline of export sales is on the margin a relief, even as underlying demand conditions remain weak.
ECB DATA (MNI): Latest Wage Tracker Consistent With Softening Compensation Expectations
The ECB's latest forward-looking wage tracker update (which includes agreements signed up to the first week of April) remains consistent with the Governing Council's base case of easing compensation pressures through 2025. Compared to the March iteration, the latest wage tracker excluding one-off payments (which we think gives the best view of underlying compensation pressures) has a slightly lower profile in Q1/Q2 2025, but an unchanged terminal in Q4. Q4 2025 wage growth excluding one-offs still tracks at 3.02% Y/Y. The wage tracker with unsmoothed one-off payments tracks Q4 growth at 2.88% Y/Y (vs 2.85% in March), while the headline wage tracker has 1.62% Y/Y (vs 1.55% in March).
EUROZONE FEB CONSTRUCTION OUTPUT -0.5% M/M, +0.2% Y/Y (MNI)
UK DATA (MNI): Price Increases, Lower Employment, 16-Year Low Export Manuf Orders
- UK FLASH APRIL MANUF PMI 44.0 (FCAST 44.0, MAR 44.9)
A few things to note in the UK flash PMIs. First a notable miss for services at 48.9 versus 51.5 expected. That is a 27-month low according to the press release. Output prices increased at the fastest pace for "nearly two years" with input costs the highest since Feb23. This in itself isn't surprising for this month as the NIC and NLW increases both took effect in April (which increased the costs of employing some people by more than 10% in aggregate). On the employment side firms reported not replacing voluntary leavers - but there wasn't such a mention of redundancies in the press release. Service output declined "marginally" and manufacturing export new orders were the lowest since Feb 09. Overall, little to be positive about in this release.
UK DATA (MNI): CGNCR GBP7.9bln Higher for FY24/25 - Will Lead Into Remit Revision
- UK MAR CGNCR GBP20.94 BN
- UK MAR PSNB GBP+16.44 BN
- UK MAR PSNB-X GBP+16.44 BN
- UK MAR PSNCR GBP2.69 BN
Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was 21.1 billion in March 2025; this was 7.4 billion less than in March 2024, and brings the total for the FYE March 2025 to 180.5 billion, 7.9 billion more than forecast by the OBR. This is what feeds into the remit revision - so a slightly smaller remit revision is likely as this isn't quite as bad as expected (despite the accrual measures such as PSNBex coming in higher this month with an upward revision).
UK JAN-MAR MEDIAN PAY AWARDS +3%: Brightmine (MNI)
AUSTRALIA DATA (MNI): Exports & Confidence Impacted by Protectionism
The S&P Global preliminary April PMIs showed steady but moderate growth at the start of Q2 with the composite at 51.4 down slightly from 51.6 with services printing inline. Manufacturing activity eased slightly with the PMI at 51.7 after 52.1 in March, but the fourth consecutive month in positive territory after spending most of 2024 contracting. Strength was driven by the domestic economy though with global trade developments weighing on exports and confidence.
FOREX: USD Off Lows, But Rally Shallow Ahead of Bessent Appearance
- A key focus for markets Wednesday will be an appearance from US Treasury Secretary Scott Bessent, who appears at an Institute of International Finance event to share his thoughts on the state of the global financial system. The appearance will take on greater focus given the reports yesterday that Bessent foresees a de-escalation in trade tensions between the US and China, who have effectively installed a bilateral trade embargo. He is set to appear from 1000ET/1500BST.
- The USD Index maintains a large part of the Tuesday rally - triggered by Trump's assurance that he has no intention of firing the Fed chair - however further gains for the USD clearly need fresh impetus given the close proximity to the pullback low. The USD Index remains under the pressure of a death cross in DMA space (50-dma < 200-dma), signaling the building of negative short-term momentum.
- Equity futures markets are firmer across the board, with Wall Street set for a solid open later today. Tesla shares are sharply higher pre-market after earnings yesterday disclosed that Elon Musk would step back from his role in government and focus more wholly on the company. As a result, shares are higher by 6.5% pre-market and set to add $50bln in market cap at the open.
- This risk-on backdrop is supporting AUD most notably, keeping AUD/USD within range of the 0.6439 bull trigger and 0.6467 200-dma. Separately, the tariff and Fed-independence induced volatility has prompted the potential formation of a hammer in the GBP/USD daily chart which, if confirmed, could see the pair establish a base and resume the short-term uptrend. Strength through 1.3400-24 would be key here - opening the 1.3434 bull trigger (the Sep'24 high).
EGBS: Bund Futures Off Lows, But Buoyant Euro Equities Still Weighing
The recovery in risk appetite following yesterday’s constructive comments from Bessent and Trump leaves Bund futures -31 ticks versus yesterday’s settlement levels at 131.64. The weaker-than-expected Eurozone April flash services PMIs (led by Germany and France) may have aided the recovery from session lows of 131.44.
- Initial resistance and the bull trigger remains at 132.03, the April 7 high. Meanwhile, the April 17 low at 130.87 provides support.
- The Eurozone-wide services PMI was 49.7 (vs 50.5 cons, 51.0 prior). While the miss was expected given the weaker-than-expected French and German data earlier this morning, the smaller deviation from consensus (compared to FR/GE) suggests the EZ ex-France and Germany was a little better than expected.
- The German curve has bear flattened, with Schatz yields up 6bps.
- Today’s E4bln 2.50% Feb-35 Bund auction saw very soft results, but the market impact was limited.
- Spreads have been set for today’s triple tranche Austrian syndicated tap.
- 10-year EGB spreads to Bunds are tighter owing to the risk backdrop. The BTP/Bund spread is down 3bps to ~113.5bps.
- Portugal will ask the EU to use a fiscal rule escape clause to allow for increased defence spending.
- Eurex will launch a joint EU bond future on September 10 2025.
- The remainder of today’s regional calendar includes ECB-speak from Knot, Villeroy, Lane and Cipollone.
GILTS: Twist Flattening Holds, BoE Comments Eyed
Twist flattening has dominated on the gilt curve this morning, with 3 factors defining this morning’s price action:
- Spillover from Tsys after U.S. President Trump pushed back against the idea that he was looking to fire Fed Chair Powell, as well as some comments pointing to the potential for a moderation in the Sino-U.S. trade war.
- The DMO’s revised gilt remit surprising most by coming in marginally lower than the prior estimate, skewing issuance further away from the long end in the process (T-bill, short-dated and unallocated bucket issuance was revised higher, while long-end issuance was revised lower).
- Softer-than expected flash PMIs.
- Gilt futures broke through initial resistance at the open, with bulls now looking to pierce 93.00 before shifting focus to a Fibonacci retracement at 93.44. The contract last prints 92.80 vs. session highs of 92.95.
- Yields 3.5bp higher to 9bp lower.
- 2s10s ~13bp off cycle closing highs, last ~65.6bp.
- 5s30s ~11bp off yesterday’s cycle closing high, last 127.8bp.
- BoE-dated OIS covering ’25 meetings back to little changed on the day, showing 92bp of cuts through year-end, with the next 25bp step still fully discounted through the May meeting. Recent range extremes of ~97bp of cuts through year-end remains untested/intact.
- Comments from BoE’s Pill (11:30 BST), Bailey (18:15 BST) & Breeden (19:00 BST) due throughout the day.
EQUITIES: E-Mini S&P Builds on Tuesday's Gains, Targets Resistance at 20-Day EMA
Eurostoxx 50 futures have recovered from Tuesday’s low. Recent gains highlight a corrective cycle and the rally marks an unwinding of a recent oversold trend condition. Resistance at the 20-day EMA, at 4971.53, has been breached. The next level to watch is 5105.00, the 50-day EMA. Key support and the bear trigger has been defined at 4444.00, the Apr 7 low. A break of this level would confirm a resumption of the downtrend. A reversal higher in S&P E-Minis on Apr 9 highlighted the start of a correction. The trend condition has been oversold following recent weakness and gains have allowed this to unwind. The contract remains below important resistance points and the trend condition is bearish. A resumption of weakness would refocus attention on 4832.00, the Apr 7 low and bear trigger. Initial resistance to watch is 5425.57, the 20-day EMA.
- Japan's NIKKEI closed higher by 648.03 pts or +1.89% at 34868.63 and the TOPIX ended 52.2 pts higher or +2.06% at 2584.32.
- Elsewhere, in China the SHANGHAI closed lower by 3.402 pts or -0.1% at 3296.355 and the HANG SENG ended 510.3 pts higher or +2.37% at 22072.62.
- Across Europe, Germany's DAX trades higher by 621.39 pts or +2.92% at 21913.28, FTSE 100 higher by 137.76 pts or +1.65% at 8466.24, CAC 40 up 153.25 pts or +2.09% at 7479.72 and Euro Stoxx 50 up 119.92 pts or +2.42% at 5081.37.
- Dow Jones mini up 657 pts or +1.67% at 40016, S&P 500 mini up 115.25 pts or +2.17% at 5430, NASDAQ mini up 468.75 pts or +2.55% at 18853.75.
Time: 09:55 BST
COMMODITIES: Recovery in WTI Futures Still Considered Corrective, For Now
A bearish theme in WTI futures remains intact and the recovery since Apr 9 is - for now - considered corrective. The move higher is allowing an oversold trend condition to unwind. Recent weakness has resulted in the breach of a number of important support levels, reinforcing a bearish threat. A resumption of the bear cycle would open $53.72, a Fibonacci projection. Resistance is seen at $64.49, the Mar 5 low. The 50-day EMA is at $66.12. The trend needle in Gold continues to point north and this week’s fresh cycle high reinforces bullish conditions. The latest move down is allowing an overbought trend condition to unwind. Moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. The next objective is $2547.9, a Fibonacci projection. Initial firm support to watch lies at 3184.2, the 20-day EMA.
- WTI Crude up $1.1 or +1.73% at $64.78
- Natural Gas up $0.03 or +1.13% at $3.042
- Gold spot down $62.06 or -1.84% at $3318.74
- Copper up $3.15 or +0.64% at $496.25
- Silver up $0.39 or +1.19% at $32.9004
- Platinum up $10.08 or +1.05% at $970.41
Time: 09:55 BST
| Date | GMT/Local | Impact | Country | Event |
| 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 | 1400/1000 | US | Treasury Secretary Scott Bessent | |
| 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 | |
| 24/04/2025 | 0645/0845 | ** |  FR | Consumer Sentiment |
| 24/04/2025 | 0700/0900 | ** |  ES | PPI |
| 24/04/2025 | 0800/1000 | *** |  DE | IFO Business Climate Index |
| 24/04/2025 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 24/04/2025 | 1000/1100 | ** | GB | CBI Industrial Trends |
| 24/04/2025 | 1230/0830 | *** | US | Jobless Claims |
| 24/04/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 24/04/2025 | 1230/0830 | * |  CA | Payroll employment |
| 24/04/2025 | 1230/0830 | ** | US | Durable Goods New Orders |
| 24/04/2025 | 1300/1500 | ** |  BE | BNB Business Confidence |
| 24/04/2025 | 1300/1500 | EU | ECB's Lane at Peterson Institute Webcast on Monetary Policy Strategy | |
| 24/04/2025 | 1325/1425 | GB | BOE's Lombardelli on Monetary Policy Strategy | |
| 24/04/2025 | 1400/1000 | *** | US | NAR existing home sales |
| 24/04/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 24/04/2025 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 24/04/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 24/04/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 24/04/2025 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 24/04/2025 | 2100/1700 | US | Minneapolis Fed's Neel Kashkari |
