MNI US OPEN - Electronics Granted Tariff Reprieve... For Now

China's exports grew 12.4% y/y to USD313.91 billion in March, higher than the 4.4% y/y consensus, according to data released by China Customs on Monday. The month-over-month growth recorded a 46.0% surge, the second highest reading on record after the 47.5% increase in Mar 2023, when China first eased pandemic-related controls. 

BONDS: Gilts Unwind A Portion Of Last Week's Selloff, Outperforming Bunds

The 10-year Gilt/Bund spread has tightened 5bps to 213bps, with UK paper staging a light relief rally alongside USTs this morning. Market moving headline flow has been relatively limited, with participants assessing weekend rhetoric from US officials on consumer electronics tariffs alongside the highly volatile nature of last week’s moves.

• Gilt yields are 3.5-9.5bps lower across the curve, bull flattening. 2s30s has fallen 6bps to ~141bps, unwinding last week’s notable steepening.
• German yields are flat to 3bps lower, with the belly outperforming.
• Futures volumes are comfortably below recent averages. Bunds are -14 ticks at 130.84 (Initial resistance at the Apr 11 high of 131.42; Support at the 20-day EMA of 129.59). Gilts are +66 at 91.30 (Initial resistance at the 20-day EMA of 91.84; Support at Apr 11 low of 90.47).
• Strength in US equity futures has fed well into outperformance for cash European indices this morning. The reprieve for electronics imports from China into the US is the driver here. That helps 10-year EGB spreads to Bunds tighten.
• BTPs outperform, also aided by S&P’s upgrade of Italy's sovereign rating to BBB+ (Outlook Stable) after hours on Friday.
• This week’s regional calendar is headlined by UK labour market (Tues) and inflation (Weds) data and the ECB decision (Thurs).

FOREX: Broad Greenback Weakness Resumes Amid Equities Rally

• Carryover from the tariff reprieves for key tech products (released late on Friday) has aided sentiment to start the week, with the major equity benchmarks rallying and the greenback trading with an offered tone. This has allowed the USD index edge back below the 100.00 mark, narrowing the gap to Friday’s cycle low at 99.01. 10-year treasury yields are 4bps lower on the session, providing an additional dollar headwind.
• The key mover on the session is the Japanese yen once again. After gapping higher at the open to levels around 144.30, USDJPY has steady sold off, seeing the pair reach as low as 142.24 before stabilising. Price action fell just short of the 142.02 lows from last week. The trend condition remains bearish, and sights are on 141.65 next, the Sep 30 ‘24 low.
• Boosted risk sentiment has provided another boost for NZDUSD, which has risen ~1% Monday. The recovery seems to have boosted by further short covering above 0.5850 and returns to levels last seen in December, just below the 0.5900 mark.
• In tandem, GBP has been another beneficiary as cable approaches the 1.32 handle once more. Overall, with reciprocal tariffs delayed, GBP is rallying well - underscoring GBP's correlation with risk - which looks through only marginal tweaks to monetary policy pricing. Technically, moving average studies remain in a bull mode position that highlights a dominant uptrend. An extension higher would open key resistance and the bull trigger is 1.3207, the Apr 3 high.
• EURUSD has tracked back to the 1.14 handle, however, the pair remains comfortably off the 1.1473 cycle highs. As a reminder, most recent price action has seen EURUSD substantially narrow the gap to 1.1495, the Feb 10 2022 high and a key medium term technical point. Should the volatile price action continue, a Fibonacci projection level at 1.1555 is notable above here. Initial support lies at the 1.1144 breakout level.
• Highlights on Monday will be on central bank speakers, with Fed’s Waller and Harker scheduled.

EQUITIES: Pre-Market Surge for Apple Follows Sectoral Reprieve

• Strength in US equity futures has fed well into outperformance for cash European indices this morning. The reprieve for electronics imports from China into the US is the driver here, evident in early strength in the likes of Apple - whose supply chain is now spared from not only the 145% tariffs on China, but also the 10% blanket tariff applied to all other territories.
• As a result, Apple's German listing has rallied near 9%, while their US shares are higher by over 6% pre-market. Similarly, NVIDIA are higher by 3%, Intel by 2.7% and Qualcomm by 2.1%.
• Naturally, the NASDAQ-100 future is leading the bounce - higher by 1.9% to extend the bounce off the low to over 15%. A further 3% rally in the index would erase the Liberation Day sell-off.
• Equity volatility now looks to earnings season this week - (our schedule here: https://mni.marketnews.com/4cnn1GO ). Highlights are:
• Monday: Goldman Sachs
• Tuesday: J&J, Bank of America, Citigroup
• Wednesday: Abbott Labs, Progressive Corp
• Thursday: American Express, Charles Schwab, UnitedHealth, Netflix

EQUITIES: Climb for EuroStoxx50 Highlights Start of Corrective Cycle

A short-term reversal in S&P E-Minis last week highlights the start of what appears to be a corrective cycle. The trend condition has been oversold following recent weakness and the move higher is allowing this set-up to unwind. Eurostoxx 50 futures traded in an extremely volatile manner last week and rallied sharply higher from recent lows. The climb highlights the start of a corrective cycle.

• Japan's NIKKEI closed higher by 396.78 pts or +1.18% at 33982.36 and the TOPIX ended 21.6 pts higher or +0.88% at 2488.51.
• Elsewhere, in China the SHANGHAI closed higher by 24.581 pts or +0.76% at 3262.808 and the HANG SENG ended 502.71 pts higher or +2.4% at 21417.4.
• Across Europe, Germany's DAX trades higher by 496.08 pts or +2.43% at 20871.52, FTSE 100 higher by 151.38 pts or +1.9% at 8116.64, CAC 40 up 146.37 pts or +2.06% at 7252.36 and Euro Stoxx 50 up 105.65 pts or +2.21% at 4894.76.
• Dow Jones mini up 397 pts or +0.98% at 40785, S&P 500 mini up 79 pts or +1.47% at 5471, NASDAQ mini up 333.25 pts or +1.77% at 19144.5.

COMMODITIES: Bearish WTI Theme Extends

The trend condition in Gold remains bullish and last week’s rally confirms and reinforces this condition. The yellow metal has traded through $3167.8, the Apr 3 high, to resume the primary uptrend and trade to fresh all-time highs. A bearish theme in WTI futures remains intact and last Wednesday's rally is - for now - considered corrective. The move higher is allowing an oversold trend condition to unwind. Recent weakness has resulted in the breach of several important support levels.

• WTI Crude up $0.14 or +0.23% at $61.59
• Natural Gas down $0.06 or -1.7% at $3.464
• Gold spot down $13.65 or -0.42% at $3223.89
• Copper up $3.05 or +0.67% at $455.35
• Silver down $0.02 or -0.07% at $32.2695
• Platinum up $8.18 or +0.86% at $956.57