US DATA: ADP Misses Along With Recent Downward Revisions

• President Donald Trump invoked the IEEPA to impose sweeping tariffs on goods imported from Mexico, Canada, and China. Trump threatened tariffs on the EU and additional tariffs on strategic sectors like metals and semiconductors.
• The move, which effectively torpedoes the USMCA, marks the first time the IEEPA has been used to impose tariffs and is likely to face litigation from Democrats.
• Canadian Prime Minister Justin Trudeau announced retaliatory 25% tariffs on more than USD$100 billion of US imports. Canada’s likely future prime minister, Pierre Poilievre – an erstwhile ally of Trump - said Canada should, "retaliate with dollar-for-dollar tariffs” and “never back down.”
• Mexican President Claudia Sheinbaum instructed her Secretary of the Economy “to implement Plan B" and is expected to give a press conference at 10:00 ET 15:00 GMT.
• Leaders from the European Union’s 27 member states will meet in Brussels today, with the bloc promising to “respond firmly” to US trade measures.
• Lawmakers offered a muted response but Republicans in agricultural and manufacturing states are likely concerned about blowback to their states' economies.
• Rohit Chopra has been removed as director of the CFPB.
• The Gaza ceasefire deal may hinge on a meeting between Trump and Netanyahu tomorrow.
• Trump’s hardline rhetoric appears to have drawn concessions from Panama and Venezuela.
• Trump will meet with Japanese Prime Minister Shigeru Ishiba on Friday.  
• Poll of the Day: Republicans are optimistic about the economy. 

Full article: US DAILY BRIEF

Pullbacks remain shallow in gilts at this stage, with fresh demand for core global FI markets seen in early NY trade, helping underpin UK paper.

• Futures last +67 at 93.44, a fresh session high.
• Fibonacci resistance located beyond session highs at 93.64, with the bullish corrective phase in the contract extending this morning.
• Yields 6.0-8.5bp lower today.
• Gilt bulls have still been unable to close the December 17 opening gap higher in 10-Year yields (4.442%).
• This morning’s bull steepening theme remains intact on the curve.
• Spread to Bunds back from ~211.5bp seen this morning to ~207.5bp last, flat on day.
• Gilts were more hesitant to initially react to the weekend tariff headlines given perceptions surrounding the relative likelihood of U.S. tariffs being levied on both the EU & the UK (higher odds of moves against the EU at present).

• Trump unveiling long-promised tariffs over the weekend has seen heavy declines in implied rates of prominent trading partners this morning.
• Canada unsurprisingly sees the heaviest declines amongst DM counterparts due to both its interwoven trade linkages and Trump of course starting with 25% tariffs on all Canadian goods aside from only a limited carve-out for energy (10% on items including oil & electricity). Trump and Trudeau are set to talk this “morning” but with no further details on timing.
• CORRA implied yields have continued to push lower, now as much as 18.5bps lower on the day vs ~10bp lower at the US crossover.
• BoC analysis published Wed showed US 25% tariffs on all trading partners with full retaliation would see Canadian GDP growth 2.4pps and 1.5pp lower in years 1 and 2, whilst CPI inflation would be just 0.1pp higher in year 1 before a more significant 0.5pp in year 2 and 1.0pp in year 3.
• Euribor yields also see heavy declines though, up to 8bps lower on the day in 1H26 contracts on the well-flagged growth concerns of Trump saying tariffs on the EU “will definitely happen”. They have however been lifted a little with Hassett’s focus on drug-related issues.
• Mar 2026 Euribor yields are currently 22bps below levels seen prior to Thursday’s ECB decision. It’s not down to any particularly messaging there (which called for a gradual further easing in monetary policy in a data-dependent path), but rather the double hit from first softer than expected German national CPI inflation (albeit not HICP) on Friday before of course renewed growth concerns on latest tariff threats. Further, today's small beat for Eurozone-wide HICP came primarily from energy-led Italian HICP whilst services saw some partial moderation.
• It leaves CORRA implied yields at fresh cycle lows, currently at 2.22% for through the bottom of the BoC’s 2.25-3.25% neutral rate estimated range having fallen 50bps since Trump’s inauguration.
• The terminal in Euribor implied yields meanwhile has slipped further to 1.90%, -8bp from Friday and -20bp since just before Thursday’s ECB decision (for a similar -17bp since Trump’s inauguration). It's the lowest Euribor terminal yield since Dec 31.