BOJ: Rinban Purchase Offer

Scott Bessent was out over the weekend trying to put a positive spin on the events that unfolded over last week. He claimed the US was headed towards a “financial calamity” and that the Trump administration is trying to help Americans getting demolished by debt.

• “ I’m not happy with what’s going on in markets today, but the distribution of equities across households is that the top 10% of Americans own 88% of equities, the next 40% own 12% of the stock market.”
• “The bottom 50% has debt, they have credit card bills,  they rent their homes, they have auto loans. We have got to give them some relief.”
• Trump seems to believe getting manufacturing back to the US will solve all his problems and reduce the deficit the US has particularly in the case of China. His comments this morning that “he is not making a China deal unless they solve the trade deficit” echoes this sentiment.
• The problem he has and what the market is trading on, is that to rebuild US manufacturing is a decade long process that if undertaken will face higher inflation and lots of pain.
• The goal itself is commendable but it's not a quick fix and are they able to stomach the cost of the transition? 
• The market is voting with its feet as US assets are being sold and the proceeds repatriated. Hedge funds dumped global stocks on Thursday at the fastest pace on record as the world realises if the US goes into a recession the rest of the world is not far behind.
• There is a sense of panic as stocks enter freefall and the market digests what this means for global growth. With this acknowledgement of a global slowdown in growth the USD once more becomes in demand, especially against risk proxies like the AUD and NZD and most importantly against EM.
• The BBDXY opened around 1262 and trades a little higher on a 1264 handle as Asia opens up under pressure.

• Gold has benefited more than most in the trade war build up yet with it now in full swing, even it is suffering.
• Gold lost ground for the week last week for only the second time this year.
• Falling by -1.52% gold has been hit by the broadening trade wars’ potential impact on the global economy.
• Gold follows a general commodities rout with London’s Metal Exchange having the biggest decline since early 2020.
• Having touched highs of $3,134.17 at the start of last week,  gold saw forecasters restating their year end forecasts higher and higher.
• Gold has fallen dramatically since, breaking through $3,000 this morning to be at $2,982.20.
• Gold has traded through the 20-day EMA of 3030.25 with the next key technical level, the 50-day EMA of 42,945.25

Oil prices fell sharply on Friday and have continued the downtrend during APAC trading so far today in response to expectations that global growth and thus demand for crude will be severely impacted by the imposition of significant tariffs on US imports and China’s retaliation. This concern has driven Saudi Arabia to reduce its benchmark Arab Light by $2.30/barrel for Asia in May, which is pressuring markets today. The pullback in overall risk appetite continues with AUDUSD down 0.7% and S&P e-mini -3.6% today.

• WTI is down 3.4% to $59.87/bbl today after falling 6.9% to $62.32/bbl on Friday. It reached a low of $60.45, which it has breached today. The benchmark has broken below 4 support levels, including the bear trigger.
• Brent fell 5.8% on Friday to $66.06/bbl off the intraday low of $64.03. It is down a further 3.3% to $63.44 at the start of today’s APAC session. It has broken the bear trigger at $67.95 and key medium-term support at $67.87 as well as level 4 at $66.55. Not only has the bullish theme been cancelled but a bearish one has been strengthened.
• Earlier in 2025, oil prices fell on news that OPEC would go ahead with the start of its output normalisation in April but the size of the increase in production was larger than expected, which has exacerbated recent price moves. Forecasts have been for a market surplus in 2025 for some time and it could now be worse with lower expected demand and higher-than-forecast OPEC output.