US FISCAL: Total Tariff Income Jumping In May As New Rates Hit

Equity futures are picking up after the cash close with carmaker stocks leading as the FT reports (link) the Trump administration is set to soften tariffs due to be paid by US automakers on key imported components. The report centers on a "destacking" of some previously-announced tariffs, including the fentanyl duties on Chinese imports and duties on steel and aluminum. From the FT article, citing "two people with knowledge of the matter":

• "The move would exempt car parts from the tariffs that Trump is imposing on imports from China to counter fentanyl production, as well from those levied on steel and aluminium — a “destacking” of the duties, according to two people with knowledge of the matter. The exemptions would leave in place a 25 per cent tariff Trump imposed on all imports of foreign-made cars. A separate 25 per cent levy on parts would also remain and is due to take effect from May 3. "
• It's another sign that the Trump administration is reconsidering various aspects of its tariff policies, and the risk-on market reaction reflects that this is being seen as another climbdown.

• Treasuries finishing near late session lows, curves continue to unwind Monday's sharp steepening with short end rates weaker vs. Bonds. Busy session for chasing tariff related headline risk.
• Treasuries opened higher as Pres Trump softened his stance on sacking Fed Chair Powell and reducing China tariffs, improved sentiment also lifting S&P eminis with ESM5 futures tapping 5499.75 high.
• Rates gapped higher briefly on a WSJ article that rehashed possible China tariff cuts, but support was short lived as markets assessed potential reductions, non-unilateral negotiations as well as comments from Tsy Sec Bessent's "in need of a rebalancing".
• US Treasury Secretary Bessent further stated that there is no unilateral offer from Trump to cut China tariffs, and that a full China trade deal could take two-to-three years.
• Tsy Jun'25 10Y futures currently -3.5 at 110-22 vs. session high of 111-18.5. Initial technical support at 110-15 (Apr 15 low) followed by 109-08 (bear trigger). Curves holding flatter profiles but off lows, 2s10s -5.713 at 52.252 (46.527 low), 5s30s -6.569 at 81.760 (77.371 low).
• Cross asset: Bbg US$ index near session high currently +6.84 a t 1228.46; stocks firmer but well off highs: SPX eminis +90.50 at 5405.25 (5499.75 high), Gold cratered: down over 103 at 3277.5 earlier trades 3295.5 at the moment, crude retreated as well (WTI -1.36 at 62.31).

• RES 4: 1.4415 High Apr 1
• RES 3: 1.4296 High Apr 7 
• RES 2: 1.4165 50-day EMA 
• RES 1: 1.3906/4029 High Apr 17 / 20-day EMA  
• PRICE: 1.3871 @ 16:29 BST Apr 23
• SUP 1: 1.3781 Low Apr 21
• SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
• SUP 3: 1.3696 Low Oct 10 2024
• SUP 4: 1.3643 Low Oct 9 ‘24 

A bearish theme in USDCAD remains intact for now despite Wednesday’s spot rally. Fresh cycle lows continue to highlight a resumption of the downtrend and signal scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear -mode position, highlighting a dominant downtrend. First resistance to watch is 1.4029, the 20-day EMA.