FED: Beige Book: Price Pressures Tick Higher, Passthrough In Question
The April Beige Book summary of Inflation conditions: "Prices increased across Districts, with six characterizing price growth as modest and six characterizing it as moderate, similar to the previous report. Most Districts noted that firms expected elevated input cost growth resulting from tariffs."
- Prior edition (Feb): "Prices increased moderately in most Districts, but several Districts reported an uptick in the pace of increase relative to the previous reporting period. "
- The latest edition suggests "most" businesses will attempt to pass along tariff-related price increases to consumers, but the ability to do so may vary due to softer demand in some sectors - a potential contrast with the high-inflation pandemic reopening period where sellers were easily able to pass on price increases:
- "Many firms have already received notices from suppliers that costs would be increasing. Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy. Most businesses expected to pass through additional costs to customers. However, there were reports about margin compression amid increased costs, as demand remained tepid in some sectors, especially for consumer-facing firms."
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EURGBP TECHS: Pierces The 50-Day EMA
- RES 4: 0.8530 76.4% retracement of the Aug 8 - Dec 19 ‘24 bear leg
- RES 3: 0.8494 High Aug 26 ‘24
- RES 2: 0.8474 High Jan 20 and a key resistance
- RES 1: 0.8428/8450 High Mar 18 / 11 and the bull trigger
- PRICE: 0.8364 @ 16:52 GMT Mar 24
- SUP 1: 0.8351/46 50-day EMA and pivot support / Low Mar 24
- SUP 2: 0.8321 61.8% retracement of the Mar 3 - 11 bull leg
- SUP 3: 0.8391 76.4% retracement of the Mar 3 - 11 bull leg
- SUP 4: 0.8241 Low Mar 3 and a key support
EURGBP remains in a retracement mode. The cross has recently breached 0.8369, the Mar 14 low, and attention is on the 50-day EMA, at 0.8351. The average marks a key short-term pivot level. It has been pierced, a clear break would undermine the recent bull theme and signal scope for a deeper pullback, towards 0.8321, a Fibonacci retracement. Key resistance and the bull trigger is 0.8450, the Mar 11 high.
BONDS: Bund Biggest Short In Europe Pi (1/2)
From our Europe Pi update earlier (PDF):
- German contracts are now all "short". Schatz, Bobl, and Buxl each carry that distinction, while Bund has become the biggest structural short in MNI Pi (at very short).
- Each contract saw trade indicative of short covering last week, with the exception of long-setting in Bobl.
US: Uncertainty Persists Over Trump's Tariff Agenda
Bloomberg has published a useful tracker identifying every tariff imposed or threatened by US President Donald Trump and its economic effect.
- Bloomberg reports: “While the unpredictability and risk of weaker economic growth have roiled financial markets, Trump has signaled plans to press ahead with more aggressive [tariff] moves..."
- Trump and White House officials have suggested that Trump’s April 2 ‘Liberation Day’ tariffs could be more targetted than previously signalled although with a week until the April 1st bilateral trade review is due, it is unlikely that any final decision has yet been taken.
- Trump said in White House remarks on Friday that, despite press reports, he hasn’t changed his mind on tariffs: “I don't change. But the word flexibility is an important word. Sometimes there's flexibility. So, there'll be flexibility.”
- The Wall Street Journal reports that tariffs on “industrial sectors like cars and microchips are no longer expected to be announced on that date [April 2], though major trading partners will still be hit with so-called reciprocal tariffs… The administration is now focusing on applying tariffs to about 15% of nations with persistent trade imbalances with the US..."
Figure 1: Tariffs Imposed, Threatened, or Suspended, (Affected Trade)
Source: Bloomberg
