Trump administration plans next round of tariffs

The Trump administration’s next big round of tariff announcements is scheduled for April 2, when there is set to be a significant further increase on levies on imports into the US, most notably so-called reciprocal tariffs. However, some messaging coming from officials and reports over the weekend suggested that the imposition might not be the sweeping implementation previously anticipated, but that some countries or blocs might see themselves carved out. It also remains to be seen if new tariffs on sectors such as lumber and autos will be introduced at the same time.

Following a meeting on Sunday, Turkish regulators have implemented a number of measures aimed at curbing market volatility amidst political developments in the country. The new rules include a ban on short selling across all stocks and also a relaxation of buyback rules.

Consumer confidence in the Eurozone deteriorated in March according to the preliminary reading, dropping to -14.5, from -13.6 previously. This was also a worse reading than the consensus prediction of -13.0.

There was a deterioration in Japan’s manufacturing PMI in March as it fell to 48.3, down from 49.0 previously. Services turned contractionary at 49.5, down from 53.7 in February, leading to a composite reading of 48.5, down from 52.0 the previous month.

Today’s Economic Data and Events

09:00 India manufacturing PMI, March

12:00 France manufacturing PMI, March

12:30 Germany manufacturing PMI, March

13:30 UK manufacturing PMI, March

17:45 US manufacturing PMI, March. Forecast: 51.8

Fixed Income

• The dovish tilt on the Federal Reserve’s rate-setting decision last week, with the dot plot still indicating two rate cuts this year, saw USTs rally last week. Yields on both the 2yr and the 10yr ended the week 7bps lower, at 3.9481% and 4.2462% respectively.
• In the UK, gilt yields headed higher on concerns around the government’s likely need to increase borrowing, with the 2yr up 8bps on the week to 4.265%. By contrast, yields on German bunds fell w/w with the 2yr 5bps at 2.128%.

FX

• The dollar index snapped its two-week losing streak last week, closing up 0.4% against its basket of peer currencies. Gains were broad based, with the greenback adding 0.1% w/w against GBP to 1.2919, and 0.6% against EUR to 1.0818.
• TRY ended the week at 37.73 to the dollar, down 3.3% as political developments raised investor concerns.

Equities

• US stocks closed up last week, boosted by the dovish interpretation of the Fed meeting. The S&P 500 closed up 0.5% w/w, its first weekly gain in five. The Dow Jones added 1.2% w/w while the NASDAQ gained 0.2%.
• Some of the wind came out of the sails of European equity markets last week and the DAX closed 0.4% lower compared with the previous Friday. The CAC and the FTSE 100 both added 0.2% w/w.
• Locally, the DFM ended the week down 0.8% while the ADX closed 0.5% lower. In Saudi Arabia the Tadawul closed up 0.3% w/w on Thursday while Egypt’s EGX 30 added 1.2%. In Turkey, the Borsa Istanbul 100 index closed down 16.6% on the week.

Commodities

• Oil futures enjoyed a w/w gain last week, boosted by supply concerns around the potential widening of sanctions as the US penalized a Chinese refinery for allegedly purchasing Iranian oil.
• Brent futures closed up 2.2% w/w, the second weekly gain in a row, to close at USD 72.2/b while WTI added 1.6% to USD 68.3/b.