CREDIT OPEN: Trump's tariff time bomb ticking
As financial markets gear up for another eventful day, global equities are showing mixed signals. Euro Stoxx futures are currently trading down 0.285%, despite overnight gains in US markets, with the S&P 500 and Nasdaq closing higher. Asian markets presented a varied picture, with Japan's Nikkei advancing 0.42% while Chinese bourses remained largely unchanged, reflecting the complex interplay of global economic forces.
All eyes are on President Trump's upcoming tariff announcement, scheduled for 20:00 GMT (16:00 ET), with automobile tariffs expected to follow on Thursday. The lack of concrete details ahead of the announcement has left markets in a state of anticipation, as last-minute negotiations continue to shape the final policy decisions. This uncertainty is likely to keep investors on edge throughout the trading session.
Chicago Fed President Goolsbee has raised concerns about the potential impact of tariffs on consumer spending and business investment. His comments highlight the delicate balance the Federal Reserve must strike in navigating the economic landscape, particularly noting the sharp decline in business and consumer confidence. While tariffs may have a transitory effect on prices, Goolsbee warns of longer-term consequences, including the possibility of retaliatory measures and increased costs for intermediate goods.
Tuesday's release of the ISM manufacturing survey for March painted a concerning picture, with the headline gauge undershooting expectations and signalling a quicker pace of contraction than forecast. The jump in the Prices Paid sub-gauge to 69.4 suggests fresh inflationary pressures, contributing to the growing narrative of stagflation risks. This worst-of-both-worlds scenario is likely to weigh heavily on market sentiment in the coming days.
Further adding to growth concerns, the Atlanta Fed's GDP estimate for Q1 GDP growth has been revised down to -3.7% Q/Q, a significant drop from the previous -2.8% forecast. This downward revision underscores the increasing worries about economic growth trajectories and may influence market positioning across various asset classes.
The latest JOLTS data for February showed a slight softening in job openings, with the rate declining to 4.5%. This cooling in labor market conditions is expected to become a more prominent factor later in 2025, potentially influencing Federal Reserve policy decisions and market expectations for interest rates.
Richmond Fed President Barkin, a 2027 voter, has weighed in on the potential inflationary impact of tariffs, noting that higher prices could reduce consumption if consumers resist absorbing increased costs. His comments on the possibility of corporate margin compression leading to workforce reductions add another layer of complexity to the economic outlook.
As we look ahead to the day's events, market participants will be closely watching the ADP labor market report for March, factory orders for February, and final durable goods orders for February. These data points, coupled with scheduled speeches from ECB Governing Council members and Fed Governor Kugler, will provide further context for assessing the economic landscape and potential policy directions.
For more on latest developments see the European Breakfast Briefing.
Wednesday's supply prospects
Names across all sectors jumped through Tuesday’s issuance window and raised a combined EUR10.265bn via 12 separate single currency trades. EUR9.2bn of the day’s total came via IG-rated issuers to put the weekly euro IG supply total at EUR15.45bn, with another handful of names in the pipeline (below) which are set to add to that today before Trump takes centre stage. Depending on the fallout from those announcements, the issuance window may be slammed shut Thursday and so whether we are able to hit the average supply estimate of EUR32bn remains to be seen.
** EIB inaugural EUR3bn no grow May 2037 EuGBS-aligned CAB EARN
** Korea Development Bank GBP Jan 2028s
** DZ HYP EUR500m 4.4yr Green and a EUR500m 9.9yr conventional two-part covered
** Corebridge Global Funding GBP short 5yr FABN
** Lagardere EUR500m no grow 5yr
We may not have gotten as much as we were looking for – there were as many as eight stand downs Monday – though three ex-SSA issuers took their chances in what was yet another volatile environment Tuesday to raise USD2.6bn in the primary market. One of those was the sixteenth M&A-related financing of the year. For more colour, see THE ENDGAME.
What to watch Wednesday – Trump’s Liberation Day
** Key Data: SP Mar Unemployment Change (08:00), US Weekly MBA Mortgage Applications (12:00), US Mar ADP Employment Change (13:15), US Feb Factory Orders (15:00) and US Feb F Durable Goods Orders (15:00)
** Key Events: ECB’s Schnabel (11:30), Escriva (13:00) and Lane (15:05) speak, along with Fed’s Kugler (21:30)
** Auctions: UK to sell GBP1.6bn 2035 Linkers (10:00) and GE to sell EUR4.5bn 2035 Bunds (10:30)
All times BST
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