MNI EUROPEAN OPEN: Countries Looking At Options Post Tariffs
EXECUTIVE SUMMARY
- US OFFICIALS DISMISS RECESSION CONCERNS OVER TARIFFS - BBG
- CHINA MAY FRONT LOAD POLICY TO PROTECT ECONOMY - BBG
- TRUMP WANTS DEALS TO RESULT IN END OF US TRADE DEFICIT - BBG
- SPAIN & ITALY CALLING FOR EU RESTRAINT WITH TARIFFS - POLITICO
- US’ RUBIO WILL KNOW IN WEEKS IF RUSSIA TO ACCEPT TRUCE - BBC
- JAPAN PM PLANS TO VISIT US TO DISCUSS TARIFFS - BBG
Fig 1: AUDUSD hit by sharp risk deterioration
Source: MNI - Market News/Bloomberg/Refinitiv.
UK
TRADE (BBC): “Chief Secretary to the Treasury Darren Jones said the era of globalisation has "ended" following Donald Trump's new tariffs. It comes after Prime Minister Sir Keir Starmer suggested in a Sunday Telegraph article he was about to announce state intervention to protect UK firms from the US president's move.”
TRADE (BBC): “Jaguar Land Rover has announced it will "pause" all shipments to the US as it works to "address the new trading terms" after tariffs were imposed earlier this week. A 25% levy on car imports came into force on Thursday.”
BUSINESS (BBC): “The government has said it is stepping in to help the British car industry by making the rules on manufacturers going all-electric more flexible. A ban on producing new petrol and diesel cars will come into effect in 2030, after ministers reinstated a deadline that had been pushed back by ex-Prime Minister Rishi Sunak.”
EU
TRADE (POLITICO): “Economy ministers from Italy and Spain are calling for European governments to avoid confrontation with the U.S. over President Donald Trump’s tariffs, despite the biggest EU countries calling for a tougher stance.”
TRADE (POLITICO): “French Economy and Finance Minister Eric Lombard has suggested striking back against U.S. President Donald Trump's tariffs broadside by more strictly regulating U.S. Big Tech's use of data.”
DEFENCE (POLITICO): “European NATO allies should have a "clear roadmap" spelling out how any U.S. pullout from the continent would work, Finnish Defense Minister Antti Häkkänen told POLITICO.”
FRANCE (BBC): “France's far-right National Rally (RN) leader Marine Le Pen has called a court ruling banning her from running for office for five years a "witch hunt".”
RUSSIA (BBC): “The US's top diplomat has said he will know "in a matter of weeks, not months" whether Vladimir Putin is serious about peace and a ceasefire in Ukraine. Speaking after a meeting of Nato foreign ministers in Brussels, US Secretary of State Marco Rubio said ending the war is a decision that will "ultimately" have to be made by the Russian President.”
US
FED (MNI): President Trump's sweeping tariff hikes may put the Fed's dual mandate full employment and price stability "in tension," Powell said, after a speech in which he warned aggressive tariffs could hurt growth and add to inflation.
TRADE (POLITICO): “Trump administration officials on Sunday defended President Donald Trump’s massive tariff action last week, saying it has triggered a flood of requests for negotiations from countries hit by the sweeping new duties.”
TRADE (BBG): “President Donald Trump and his economic team dismissed investors’ fears of inflation and recession, offering no apologies for the market turmoil sparked by sweeping global tariffs and defiantly insisting a boom is on the horizon.”
TRADE (BBG): “Trump wants to eliminate bilateral trade deficits, particularly with China, and won't make a deal unless it drives down the US trade deficit in goods with China.”
TRADE (POLITICO): “In several recent polls — all conducted before Trump’s announcement this week, which sent markets into a spiral and brought the U.S. to the brink of an international trade war — a majority of respondents disapproved of the then-theoretical sweeping tariffs the president promised to implement.”
ECONOMY (BBG): “US Treasury Secretary Scott Bessent argues that new US tariffs are necessary and rejects the idea that they will cause a US recession, saying "I see no reason that we have to price in a recession."”
ECONOMY (BBG): “Former Treasury Secretary Lawrence Summers predicts more market turbulence ahead, citing the recent large two-day market move as a signal of trouble to come.”
CHINA (BBG): “China's objections to new US tariffs stalled a deal to sell off TikTok and keep it operating in the US, according to President Donald Trump.”
BUSINESS (POLITICO): “Less than two weeks before the start of a landmark antitrust trial against tech giant Meta, the growing relationship between President Donald Trump and Meta CEO Mark Zuckerberg is stoking fears in Washington that the White House could pull the plug on the whole case.”
ISRAEL (POLITICO): “President Donald Trump will host Israeli Prime Minister Benjamin Netanyahu at the White House on Monday, a White House official confirmed.”
OTHER
JAPAN (MNI): Japanese inflation-adjusted real wages, a barometer of households' purchasing power, stayed negative in February for the second straight month, down 1.2% vs. -2.8% in January, preliminary data released by the Ministry of Health, Labour and Welfare on Monday showed.
JAPAN (BBG): “Japanese Prime Minister Shigeru Ishiba plans to visit the US to negotiate a deal with President Donald Trump over tariffs, and will first hold a phone call with the president to urge him to drop the planned 24% tariff on Japanese imports.”
JAPAN (BBG): “Japanese Finance Minister Katsunobu Kato says he is closely monitoring market movements with a high sense of urgency.”
AUSTRALIA (MNI): “Australia’s economy could benefit initially from increased U.S. trade barriers should China and other regional trade partners stimulate their economies, but the longer-term impact will rest on the Australian dollar, its relationship with the terms of trade and the permanence of the American duties, economists told MNI.”
AUSTRALIA (BBG): “The escalation of trade hostilities and the associated volatility in financial and economic markets means that there is greater-than-usual downside risk to the domestic and global outlook, Australian Treasury says in its analysis of recent tariff announcements.”
AUSTRALIA (BBG): “The center-left Labor Party saw its vote rise to 52% on a two-party preferred basis in a Newspoll survey released by The Australian newspaper on Sunday, up a point from last week and its strongest result since May 2024.”
SOUTH KOREA (BBG): “South Korea has set June 3 as the tentative date for the next presidential election, Yonhap News reported on Monday, citing an unidentified government official.”
INDIA (BBG): “India’s government indicated it won’t take retaliatory action against the US for imposing reciprocal tariffs, focusing its efforts instead on negotiating a bilateral trade deal with the Trump administration to bring down duties.”
OIL (BBG): "Goldman Sachs Group Inc. cut oil forecasts for the second time in less than a week as the escalating trade war raises recessionary risks."
CHINA
POLICY (BBG): "China’s policymakers discussed measures over the weekend to stabilize the economy and the markets in the face of US President Donald Trump’s tariff onslaught, including whether to accelerate plans to unleash stimulus to bolster consumption, according to people familiar with the matter."
ECONOMY (MNI): China will enhance monetary and fiscal efforts to safeguard the economy from the additional U.S. tariffs that will intensify downward economic pressure, according to a commentary by the People’s Daily on Sunday.
ECONOMY (BBG): “China warned against panic in the face of Donald Trump’s tariff hikes, saying it has plenty of policy room to defend the economy but without ruling out negotiations with the US.”
MARKETS (BBG): “Chinese stocks plummeted and bond yields fell towards a record low as investors prepared for the consequences of a worsening trade conflict between the US and China.”
ECONOMY (SECURITIES DAILY): “The Politburo is expected to ramp up policy support to boost domestic demand at its April meeting, in response to the larger-than-expected U.S. tariff hikes, according to Zhang Jun, chief economist at China Galaxy Securities.”
ECONOMY (SECURITIES TIMES): “During the three-day Qingming Festival, cross-regional travel is estimated to reach 790 million trips – a 7.1% increase compared to the same period last year, setting a new record for travel volume, according to the Securities Times citing data from the Ministry of Transport.”
FINANCE (SHANGHAI SECURITIES NEWS): “China’s capital market is expected to remain resilient despite inevitable short-term fluctuations following the latest U.S. tariff hikes, analysts told Shanghai Securities News.”
CHINA MARKETS
MNI: PBOC Net Drains CNY151.7 Bln via OMO Monday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY93.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY151.7 billion after offsetting the maturity of CNY245.2 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5364% at 09:40 am local time from the close of 1.6981% on Thursday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Thursday, compared with the close of 40 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1980 Mon; -0.92% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1980 on Thursday, compared with 7.1889 set on Thursday. The fixing was estimated at 7.3122 by Bloomberg survey today.
MARKET DATA
AUSTRALIA MARCH ANZ JOB ADVERTISEMENTS +0.4% M/M; FEB. -1.3%
JAPAN FEB. LABOR CASH EARNINGS +3.1% Y/Y; EST. +3%; EST. +3.0%;M; JAN. +2.8%
JAPAN FEB. SAME BASE REGULAR FULL-TIME PAY +1.9% Y/Y; EST. +3.0%; JAN. +3.0%
JAPAN FEB. CASH WAGES FROM SAME SAMPLE +2.4% Y/Y; EST. +2.9%; JAN. +2.0%
JAPAN FEB. REAL CASH EARNINGS -1.2% Y/Y; EST. -1.3%; JAN. -1.8%
JAPAN PRELIM FEB. COINCIDENT INDEX 116.9; EST. 116.7; JAN. 116.1
JAPAN PRELIM FEB. LEADING INDEX 107.9; EST. 107.8; JAN. 108.3
CHINA END-MARCH FOREX RESERVES $3.241T; EST. $3.260T; FEB. $3.227T
MARKETS
US TSYS: Cash Bonds Bull-Steepen, Risk-Off Pared
TYM5 is stronger at 113-21, +19+ from closing levels in today's Asia-Pac session, but well off today's high of 114-10.
- According to MNI's technicals team, focus for TYM5 is on technical resistance at 114-16 (2.000 proj of the Jan 13 - Feb 7 - Feb 12 price swing) after having breached round number resistance (114-03.5 high) on Friday.
- Markets continue to be hit by the ongoing trade-related pullback in risk appetite, although some have begun to stabilise at lower levels due to selling fatigue and profit-taking, including risk-sensitive AUD and oil prices. US equity futures are down sharply but also off their intraday lows.
- Some Asian countries have said today that they will take steps to stabilise markets if needed and Japan has said it will speak with the US.
- Nevertheless, the market is continuing to digest the implications of Friday's unveiling of a 34% duty on all US imports by China.
- Cash US tsys are 3-15bps richer, led by the short-end, in Asia-Pac session.
JGBS: Richer, PM Ishiba To Push For Lower Tariffs, 30Y Supply Tomorrow
JGB futures remain sharply higher at 142.19, +53 compared to settlement levels, but well off session bests (142.95).
- “Japanese Prime Minister Shigeru Ishiba says that the government will strongly push the US for tariff reductions, while emphasizing that it does not intend to provoke conflict with the US. Ishiba says the US may have misinterpreted certain trade issues and questions whether the measures align with the US-Japan Trade Agreement.” (per BBG)
- Japan’s leading economic indicator was at 107.9 in February, compared with 108.2 in the previous month.
- Markets continue to be hit by the ongoing trade-related pullback in risk appetite, although some have begun to stabilise at lower levels due to selling fatigue and profit-taking.
- Some Asian countries have said today that they will take steps to stabilise markets if needed and Japan has said it will speak with the US.
- Cash US tsys are 3-15bps richer, led by the short-end, in Asia-Pac session.
- Cash JGBs are flat to 11bps richer across benchmarks out to the 30-year (40-year flat), with the belly leading.
- Swap rates are 7-10bps lower.
- Tomorrow, the local calendar will see BoP Current Account and Trade Balance data alongside 30-year supply.
AUSSIE BONDS: Richer But Well Off Bests, Bus & Conf Conf Tomorrow
ACGBs (YM +10.0 & XM +7.0) are richer but well below today's Asia-Pac session bests.
- Markets continue to be hit by the ongoing trade-related pullback in risk appetite, although some have begun to stabilise at lower levels. US equity futures are down sharply but also off their intraday lows.
- “Australian Treasurer Jim Chalmers blames "bad decisions" on tariffs for global stock market turmoil, despite his department forecasting minor impacts on domestic economic growth and inflation.” (per BBG)
- Cash US tsys are 3-15bps richer, led by the short end, in today's Asia-Pac session.
- Cash ACGBs are 7-10bps richer with the AU-US 10-year yield differential at +23bps.
- Bill strip pricing is +4 to +14, with whites leading.
- RBA-dated OIS pricing gives a 50bp rate cut in May a 55% probability, with a cumulative 119bps of easing priced by year-end (based on an effective cash rate of 4.09%). Earlier in the session, a 50bp rate cut in May was given an 80% probability, with a cumulative 133bps of easing priced by year-end.
- Tomorrow, the local calendar will see Consumer and Business Confidence data.
- The AOFM plans to sell A$400mn of the 4.25% 21 June 2034 bond tomorrow.
BONDS: NZGBS: Closed Well Off Bests With Twist-Steepener, RBNZ Decision On Wed
NZGBs closed mixed, well off session bests, with the 2/10 curve steeper. Benchmark yields finished 3bps lower to 4bps higher after being 9-12bps lower earlier in the session.
- Moreover, the NZ-US and NZ-AU 10-year yield differentials closed 7-8bps wider. At +44bps, the NZ-US differential is at its widest since October last year.
- Markets continue to be hit by the ongoing trade-related pullback in risk appetite, although some have begun to stabilise at lower levels due to selling fatigue and profit-taking. US equity futures are down sharply but also off their intraday lows.
- Some Asian countries have said today that they will take steps to stabilise markets if needed and Japan has said it will speak with the US.
- Swap rates closed 3-9bps lower, with the 2s10s curve steeper.
- "The RBNZ Shadow Board is in favour of lowering the OCR by 25bps to 3.50% this week." (per BBG)
- RBNZ dated OIS has 30bps of easing priced for April, with a cumulative 101bps by November 2025.
- Tomorrow, the local calendar will see the NZIER Business Opinion Survey.
- On Thursday, the NZ Treasury plans to sell NZ$275mn of the 0.25% May-28 bond and NZ$225mn of the 4.25% May-34 bond.
The market has started to realise this is not just a US problem and that a US recession has serious implications for global growth. The Chinese retaliation on tariffs over the weekend has seen another leg lower for risk assets and the demand for USDs against risk proxies has had another leg. The BBDXY opened around 1262 and is currently trading around 1264.
- EUR/USD - has had a range of 1.0882 - 1.1000, it goes into the London open near the Asian highs around 1.0980. With the equity rotation from the US back to Europe continuing the EUR is probably the best currency to be long of outside of the JPY and CHF.
- GBP/USD - range of 1.2824 - 1.2933, but is going into the London open little unchanged from its open around 1.2890.
- AUD/USD - range of 0.5933 - 0.6077. This morning's gap lower on the open from the 0.6070 area in very thin liquidity eventually found some support around 0.5933.We have spent the rest of the session clawing back some of these losses as risk attempts to stabilise the AUD is going into the London session around 0.6020.
- AUD trades very poorly in the crosses with the risk barometer AUD/JPY opening around 89.15 but gapping very quickly down to the lows around 86.20. As risk has stabilised AUD/JPY has clawed back some of these losses and goes into the London open around 87.80.
- USD/CNH - the Asian range has been 7.2927 - 7.3311, we are going into the London session trading near the highs of the day around 7.3200. Traders think a long USD/CNH is one of the cleanest expressions to trade as China retaliates to tariffs. Watch for official smoothing if we approach the 7.3600 area again.
- USD/JPY - the Asian range has been 144.82 - 147.12. The gap lower this morning in risk saw USD/JPY move very quickly back to its lows around 145.00. The JPY is a favourite to own in times of extreme stress and while this market stays under pressure there will be good buyers of JPY. USD/JPY has regained a good portion of its losses as risk found a base and we go into the London open around 146.00.
- Cross asset sentiment trades very poorly US equities down between 3.5/4% after being down more than 5% at one stage. Huge demand for Treasuries testing Fridays lows around 3.87% on the 10yr again. Commodities trade poorly as the market reevaluates what the events of this week mean for Global growth going forward, there seemed to be large Stops going through in Copper touching a low of around 403 in the futures, the move lower though has been completely erased going into the London open with the HGA contract going into the London open around 440 and the longs that have been stopped out scratching their heads.
- Key US data this week will be the US CPI April 10th.
AUDUSD
Source: MNI - Market News/Bloomberg
ASIA STOCKS: Blow to Chinese Investors as CSI 300 Drops over 6%
Investors in China have had a torrid few years given the decline in property prices damaging savings. A huge inflow into ponds followed and late last year data showed that investors were moving out of bonds into equity as the economy showed signs of improvement. Given consumer confidence has been at lows, today’s rapid decline in stocks will be of major concern as the has been the largest decline in over five years.
Taiwan returned from holidays to record decline with a decline now of 20% from the July peak to today.
The Bank of Korea issued a statement today saying that the volatility of stock and fx has increased due to the higher-than-expected tariffs and that they will take available market stabilization measures if needed.
- China’s Hang Seng lead the way today falling by -11.3% having been closed on Friday. The CSI 300 followed suit falling by -6.8% , with Shanghai down -6.8% and Shenzhen down -9.5%.
- The KOSPI fell -4.9%, backing up from week’s falls of -3.6% despite the BOK’s reassurance.
- Malaysia’s FTSE bursa KLCI Index had its worst decline of the year falling -4.33%, following last week’s modest declines.
- The Straits Times in Singapore fell -7.17%, Philippines -4.2% and Taiwan -9.7% making Monday one of the biggest down days in some time.
- India’s NIFTY 50 has had its worst opening of the year down -3.90%, following Friday’s close down -1.49%
OIL: Crude Off Intraday Low But Monitoring Supply & Demand Risks
Oil prices are down sharply again today but off the intraday lows. The continued pullback in risk and concerns over the impact of increased trade protectionism on global demand pressured crude but selling fatigue and profit taking as well as the will from a number of Asian countries to negotiate with the US and stabilise markets saw a levelling out and a modest pickup. The USD index is off its highs to be down 0.1% today.
- WTI is down 2.3% to $60.54/bbl after it approached $61.00. It reached $59.38 earlier but has struggled to hold moves below $60. Brent fell to $63.01 earlier finding support here and then rose towards $64.50. It is now down 2.4% to $63.98 today.
- Saudi Arabia’s decision to reduce its benchmark Arab Light by $2.30/barrel for Asia in May, the most in over two years, added to the tariff pressure on oil markets today. It also cut prices to Europe and the Americas but not by as much. This follows OPEC’s higher-than-expected increase in production.
- Goldman Sachs cut its Brent forecast for the second time in a week. December 2025 has been revised down $4 to $62/bbl, according to Bloomberg, due to US trade policy risking a recession in the US and possibly elsewhere. GS is now forecasting stagnation in the US with risks to the downside.
- China, the world’s largest oil importer, said that it would use policy to defend its economy and urged markets not to panic. It also hasn’t ruled out negotiating with the US.
- Later the Fed’s Kugler speaks on inflation and the ECB’s Cipollone appears. US February consumer credit, German February trade/IP, February euro area retail sales and Canadian BoC business survey print.
GOLD: Key Technical Breached as Gold Falls
- Gold has benefited more than most in the trade war build up yet with it now in full swing, even it is suffering.
- Gold delivered only its second weekly fall for the week last week for 2025, falling by -1.52% as a general commodities rout occurred with London’s Metal Exchange having the biggest decline since early 2020.
- Having reached highs of $3,134.17 at the start of last week, gold saw forecasters restating their year-end forecasts higher and higher.
- Gold broke through $3,000 this morning at the open trading as low as $2,971.30 before bouncing back to $3,028.15.
- Gold has traded through the 20-day EMA of $3034.60 and held, with its next key technical level the 50-day EMA of $2,947.07
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 07/04/2025 | 0600/0800 | ** |  DE | Trade Balance |
| 07/04/2025 | 0600/0800 | ** | DE | Industrial Production |
| 07/04/2025 | 0900/1100 | ** |  EU | Retail Sales |
| 07/04/2025 | 0945/1145 | EU | ECB's Cipollone At CBDC Conference | |
| 07/04/2025 | 1430/1030 |  US | Fed Governor Adriana Kugler | |
| 07/04/2025 | 1430/1030 | ** |  CA | BOC Business Outlook Survey |
| 07/04/2025 | 1530/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 07/04/2025 | 1530/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 07/04/2025 | 1700/1300 | * | US | US Treasury Auction Result for Cash Management Bill |
| 07/04/2025 | 1900/1500 | * | US | Consumer Credit |
| 08/04/2025 | 0500/1400 |  JP | Economy Watcher's Survey | |
| 08/04/2025 | 0645/0845 | * |  FR | Foreign Trade |
| 08/04/2025 | 0900/1000 | ** |  GB | Gilt Outright Auction Result |
| 08/04/2025 | 0900/1100 | EU | ECB's De Guindos At Spanish Banking Association Meeting | |
| 08/04/2025 | 1000/0600 | ** | US | NFIB Small Business Optimism Index |
| 08/04/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 08/04/2025 | 1400/1000 | * | CA | Ivey PMI |
| 08/04/2025 | 1400/1600 | EU | ECB's Cipollone at ECON Hearing On Digital Euro |
