FED: Powell Sounds Relaxed And Patient On Rate Moves
Powell's wrapped up the Q&A, sounding pretty relaxed overall about the economic situation and the Fed's current policy stance despite rising risks to both inflation and employment, and signalling that the Fed is not changing its patient stance on rate-setting amid major economic uncertainty. There is no "Fed put" for equity markets evident, at least for now.
- Powell implied that even with the April 2 tariff announcement out of the way, it would take much more time to see what government policies would be put in place, and then longer to see the economic effects ("If you fast forward a year from now, the uncertainty should be much lower, the actual effects of the policies should then be pretty manifest and clear") reinforcing they're not thinking about cutting rates soon.
- If you were looking for a dovish note, at least he does use the word "adjustments" as per previous Statement guidance which reinforces that there is still an easing bias and that cuts are still expected ("It's not clear at this time what the appropriate path for monetary policy will be, and we're going to need to wait and see how this plays out before we can start to make those adjustments").
- At the end of Q&A, he also cast a cautionary note on sentiment indicators (ie "soft" data), which suggests that having been burned before, they will be leaning more heavily on the "hard" data to know what to do next.
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FED: US TSY 17W AUCTION: NON-COMP BIDS $519 MLN FROM $60.000 BLN TOTAL
- US TSY 17W AUCTION: NON-COMP BIDS $519 MLN FROM $60.000 BLN TOTAL
PORTUGAL: No Confidence Vote Will Not Succeed Without PS Backing
Prime Minister Luis Montenegro has confirmed that he will move forward with a confidence motion in his gov't. The vote will effectively prove a piece of political theatre rather than a sincere attempt to draw out the opposition after the centre-left Socialist Party (PS) confirmed that it would abstain. The remaining opposition parties hold fewer seats than the minority centre-right Democratic Alliance (AD) led by Montenegro.
- The censure vote, the second in under two weeks, comes amid a scandal involving Montenegro's family-owned firm Spinumviva. In late-Feb Expresso reported that the Solverde Casinos and Hotel group pays Spiunumviva EUR4,500/month for compliance and consumer protection services. Two casino concessions currently held by Solverde have to be renewed by the gov't in 2025. In an effort to downplay the story, Montenegro confirmed in an address on 1 March that Spinumviva was now wholly under the control of his children.
- It remains to be seen whether the minority gov't can weather the storm. Opinion polling shows little change in support for the AD, PS or the right-wing nationalist Chega! since the March 2024 election. As such, Pedro Nuno Santos' PS may seek to draw out the issue to see if it can significantly damage Montenegro's standing rather than ousting the gov't immediately and risking another hung parliament.
US: CANADA: Trudeau Will Reject Unfavourable Compromise On Tariffs - Bloomberg
Bloomberg reporting that Prime Minister Justin Trudeau will not lift retaliatory tariffs on the US unless President Donald Trump removes a 25% tariff imposed on Canadian imports on Tuesday morning. The report comes after comments from Commerce Secretary Howard Lutnick raised optimism that a deal could be struck on partial tariff relief during a call between Trump and Trudeau today.
- Lutnick told Bloomberg Television Trump is mulling temporary relief: "...our expectation is that it'll be categories... It will be 25 percent but it'll be, there will be some categories left out. It could well be autos, could be others as well,"
- A Canadian government official said Trudeau would oppose a 'middle ground' floated by Lutnick that would only offer a partial rollback of American tariffs, continuing a hawkish posture from Ottawa since the tariff announcement.
- Lutnick, and Trump's key trade advisor Peter Navarro, have both stressed that the measures against Canada and Mexico are fentanyl measures rather than trade measures, leading to optimism that action on the border will lead to another reprieve from tariffs. However, the bar set by Lutnick appears difficult to achieve in the short-term: “We need to see material reduction in autopsy deaths from opioids…"
- WSJ notes: "Trump hasn't, so far, indicated he plans to roll back either the taxes on Canadian and Mexican imports, or the extra 10% tax on Chinese goods," adding he, "would move forward with his plan on reciprocal tariffs, adjusting U.S. levies to match those of other countries."
