SPAIN: Econ Min To Meet w/US' Bessent Amid Rift Over China-BBG
Bloomberg reports that Economy Minister Carlos Cuerpo is set to hold a meeting with US Treasury Secretary Scott Bessent on 15 April amid an somewhat frosty diplomatic atmosphere between Madrid and Washington, D.C. Cuerpo has said that the meeting is taking place as part of usual relations between the two countries, with tariff policy conducted at the EU level by Commissioner Maros Sefcovic.
- However, of all the major EU economies, Spain has been seen as the one most inclined to push for closer EU-China relations in recent years. Indeed, PM Pedro Sanchez was in Beijing last week for talks with President Xi Jinping amid the flurry of tariff announcements from the White House.
- Meanwhile, speaking at a conference of the American Bankers' Association last week, Bessent said, "I’m not sure if the Prime Minister or Spain’s Economy Minister made some comments this morning [suggesting] that everyone, well, we should align more with China. That would be cutting their own throats because I can tell you that the U.S. tariff wall will keep things out,"
- Agriculture Minister Luis Planas attempted to downplay Bessent's comments, saying they were made at an event rather than a formal policy speech. Planas: “We have excellent trade relations with China, which we clearly intend not only to continue but to expand. This is not contradictory on Spain’s part or the EU’s. Expanding trade relations with a partner as important as China does not come at anyone’s expense, but everyone must draw their own conclusions on this matter,”
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
