MNI US OPEN - Services Deceleration Continues in March EZ HICP
EXECUTIVE SUMMARY
- TRUMP TO UNVEIL COUNTRY-BASED TARIFFS APRIL 2 IN ROSE GARDEN
- US CHIP GRANTS IN LIMBO AS LUTNICK PUSHES BIGGER INVESTMENTS
- RBA HOLDS CASH RATE AT 4.1% AS EXPECTED
- SERVICES DECELERATION CONTINUES IN MARCH EZ HICP
Figure 1: Breakdown of March Eurozone HICP
Source: Eurostat
NEWS
US (BBG): Trump to Unveil Country-Based Tariffs April 2 in Rose Garden
President Donald Trump will announce his reciprocal tariff push on Wednesday during an event in the White House Rose Garden, his top spokeswoman said. White House Press Secretary Karoline Leavitt said Monday the announcement would feature “country-based” tariffs. She said the president is also “committed to implementing” sectoral duties, but that they were not the focus of the April 2 event and deferred to Trump about the timing of those. Members of Trump’s Cabinet would attend the announcement, Leavitt said. Treasury Secretary Scott Bessent said in a Fox News interview Monday that the tariff announcement would be at 3 p.m. Washington time.
US (BBG): US Chip Grants in Limbo as Lutnick Pushes Bigger Investments
Commerce Secretary Howard Lutnick has signaled he could withhold promised Chips Act grants as he pushes companies in line for federal semiconductor subsidies to substantially expand their US projects, according to eight people familiar with the matter. The Commerce chief wants firms that won awards from the 2022 Chips and Science Act to follow in the footsteps of Taiwan Semiconductor Manufacturing Co., which recently announced it will invest another $100 billion in US plants on top of a previous $65 billion pledge, the people said.
US/DENMARK (FT): US and Denmark to Hold First High-Level Talks Since Donald Trump’s Win
Denmark’s foreign minister is set to meet the US secretary of state this week in the first in-person, high-level diplomatic talks between the two countries since the re-election of US President Donald Trump and his vow to “take control” of the Danish island of Greenland. Lars Løkke Rasmussen and Marco Rubio plan to meet on the sidelines of a meeting of Nato foreign ministers in Brussels that begins on Thursday, two officials briefed on the preparations told the Financial Times, amid a flurry of diplomatic activity by both sides related to the Arctic territory.
US (BBG): Trump Plans Saudi Arabia, UAE, Qatar Visit on Foreign Trip
President Donald Trump said the first presidential trip of his second term would likely include visits to Saudi Arabia, the United Arab Emirates, and Qatar as well as additional stops. “It could be next month, maybe a little bit later,” Trump said Monday in the Oval Office. The president’s remarks came after Axios reported that White House officials were planning Trump’s first trip to Saudi Arabia in mid-May as a signal of appreciation for planned investment by the Gulf country in US industry.
US/N.KOREA (BBG): Trump Plans to Contact North Korea, Touting ‘Good Relationship’
President Donald Trump said he plans to reach out to North Korea “at some point” and reiterated that he has a “very good relationship” with leader Kim Jong Un. “There is communication - I think it’s very important,” Trump told reporters on Monday, without giving a timeline. “There is a big nuclear nation, and he’s a very smart guy.”
RBA (MNI): RBA Holds Cash Rate at 4.1% as Expected
The Reserve Bank of Australia monetary policy board left the cash rate at 4.10% Tuesday, noting future decisions would rely on data and the assessment of risks.“In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market,” the board noted in its statement. The decision was largely anticipated and follows February’s 25 basis point cut. The board reiterated its stance that returning inflation to target remains its highest priority.
RBA (MNI): Bullock Highlights Uncertainty Ahead of Tariffs
The Reserve Bank of Australia has ample policy space should trade disruption slow global growth, though the direct impact on the economy should be limited, said Governor Michele Bullock, stressing that future easing will hinge on data following Tuesday’s unanimous decision to hold the cash rate at 4.10%. “Inflation is coming down, unemployment is still relatively low… So we're in a good position there,” Bullock told a press conference following the Board's largely-anticipated hold. “When we went into the pandemic, interest rates were about 1.5%, they're now much higher than that. If it turns out that there is a big growth impact on Australia, we do have room to move.”
EUROPE (MNI): All Instruments on the Table for Countermeasures to US Tariffs - VdL
European Commission President Ursula von der Leyen has been speaking in the European Parliament plenary session in Strasbourg regarding the looming 'reciprocal' tariffs from the United States. Says: "We have the power to push back against US tariffs...Tariffs will just fuel inflation, the opposite of what we want to achieve. [...] We are open to negotiations on trade. [...] All instruments are on the table for countermeasures."
RIKSBANK (MNI): Riksbank Jansson Downplays Likelihood of Rate Hike
RIksbank Deputy Governor Per Jansson said Tuesday that a Swedish rate hike was not imminet but that the Executive Board had to be ready to act if inflation expectations were to become de-anchored. In a speech at a Nordea event in London, Jansson said that the Swedish economy was showing signs of recovery and "we would like to continue to support it, if possible, but not at the cost of threatening credibility." While the Riksbank's hiigh inflation scenario showed fairly rapid hikes Jansson said it was important not create unnecessary expecttations of imminent tightening but that they would act decisively if need be.
UK (MNI): Trade Min - UK ‘In Best Possible Position’ to Reverse US Tariffs
Secretary of State for Business and Trade Jonathan Reynolds has acknowledged that despite the gov'ts efforts to avoid the imposition of US 'reciprocal' tariffs on British goods, the levies are set to impact UK goods from 2 April. However, the minister added the claim that the UK is in the "best possible position of any country" to see the tariffs reversed.
CHINA (MNI): Qingming Festival Travel Expected Up Y/Y - Ministry
MNI (Beijing) China’s upcoming Qingming Festival national holiday is expected to see entry and exit average daily passenger numbers reach 2.1 million, up 21.5% y/y, the National Immigration Administration said on Tuesday. The flow of residents from Hong Kong, Macao and Taiwan, as well as overseas Chinese to the mainland, is expected to increase, the administration noted.
S.KOREA (BBG): South Korea to Rule on President Yoon’s Impeachment on Friday
South Korea is poised to rule on the political fate of impeached President Yoon Suk Yeol, deciding whether to permanently remove him from office for his short-lived martial law decree or reinstate him. The Constitutional Court will rule on the validity of Yoon’s impeachment on Friday at 11 a.m., the court said. The ruling will bring to a close an impeachment process initiated after the opposition-controlled National Assembly voted in December to suspend Yoon from his duties.
ISRAEL (BBG): Netanyahu Pulls Security Chief Nomination After Backlash
Israeli Prime Minister Benjamin Netanyahu withdrew his nomination of an ex-admiral as director of the Shin Bet security service, 24 hours after it was announced. Netanyahu’s office on Tuesday said he had informed Eli Sharvit that, “after further thought,” he will consider other candidates to replace Ronen Bar, whose firing last month is due to take effect pending a court review.
DATA
EUROZONE DATA (MNI): Services Deceleration Continues in March EZ HICP
- EUROZONE MAR FLASH HICP +2.2% Y/Y
- EUROZONE MAR FLASH CORE HICP +2.4% Y/Y
Eurozone March flash HICP Y/Y inflation came in at 2.18%, 0.02 hundredths below the rounded consensus of 2.2% (vs 2.32% February). On a monthly basis, Eurozone inflation came in at 0.61% (0.6% cons, 0.43% prior). The data on services in the release should be seen as a good sign regarding tapering stickiness in the category. Core HICP printed below consensus, at 2.41% Y/Y and 0.95% M/M (2.5% cons; Feb 2.57% Y/Y, 0.55% M/M).
EUROZONE DATA (MNI): Unemployment Rate Surprises With a New Series Low
- EUROZONE FEB UNEMPLOYMENT RATE 6.1%
The Eurozone unemployment rate for February printed a tenth below consensus at 6.1% (sa, vs 6.2% consensus and prior) making it the new series low. This is after three consecutive months at 6.2%. The decline came despite the youth unemployment rate (for those under 25 years old) ticking up marginally to 14.2% in February (vs 14.1% in January). It's a small uptick having dropped from a recent high closer to 15% in July and sees it a little above lows of 14% in early 2023.
EUROZONE DATA (MNI): EZ PMI Brings Hope of Bottoming Out
- EUROZONE MAR FINAL MANUF PMI 48.6 (FLASH: 48.7); FEB 47.6
- GERMANY MAR FINAL MANUF PMI 48.3 (FLASH: 48.3); FEB 46.5
- FRANCE MAR FINAL MANUF PMI 48.5 (FLASH: 48.8); FEB 44.5
There are some glimmers of hope in the EZ PMI print (hope that we are bottoming out rather than hope of improvement!) The following highlights from the press release: Output: "Only marginal overall, the expansion was the first in two years and the most marked since May 2022" and "Production growth was accomplished despite a further monthly fall in volumes of incoming new business."
SPAIN DATA (MNI): Marginally Lower Than Consensus With Mixed Details
- SPAIN MAR MANUFACTURING PMI 49.5 (FCST: 49.7); FEB 49.7
Spain manufacturing PMI slightly missed expectations at 49.5 in March, 0.2 points below both consensus and February's print, but details were mixed: Output and employment were marginally higher with "costs rising to the softest degree since last November." Adds that "Amid widespread reports of uncertainty in product markets affecting demand, new orders declined at a steeper rate and manufacturers reduced inventories in anticipation of lower sales in the months ahead. Confidence in the outlook deteriorated noticeably to its weakest level since last August."
ITALY DATA (MNI): Very Little Positive in the PMI Manufacturing Report
- ITALY MAR MANUFACTURING PMI 46.6 (FCST: 48.0); FEB 47.4
Nothing particularly positive in the Italian PMI manufacturing press release. It missed expectations by 1.4 points, falling to 46.6 from 47.4 (against an expected increase to 48.0). And most of the details were diappointing. The following highlights from the press release: "Production volumes were lowered once again and at the fastest rate for four months.
UK DATA (FT): UK House Prices Stall in March as Stamp Duty Holiday Ends
UK house prices unexpectedly stalled in March, according to the lender Nationwide, reflecting some weakness in the market as the stamp duty tax break comes to an end. The average UK house price registered no growth between February and March, leaving the average cost of a home at £271,316, data showed on Tuesday. House prices were up 3.9 per cent from March last year, unchanged from the annual rate in February.
UK MAR FINAL MANUF PMI 44.9 (FLASH: 44.6); FEB 46.9 (MNI)
CHINA DATA (MNI): Caixin Mar Manufacturing PMI Hits Four-Month High
MNI (Beijing) China's Caixin manufacturing PMI came in at 51.2 in March, up from February's 50.8, staying in the expansionary zone above the 50 mark for the sixth straight month and hitting the highest level since December 2024, the financial publisher said on Tuesday. The production sub-index rose slightly within the expansion range to the highest level in nearly four months, while the new order sub-index declined slightly but remained above the breakeven 50.
JAPAN DATA (MNI): Business Inflation Expectations Rise - BOJ Tankan
- BOJ MAR TANKAN LARGE MFG INDEX +12; DEC 14; MEDIAN +12
- BOJ TANKAN LARGE NON-MFG INDEX +35; DEC +33; MEDIAN +33
- BOJ JUNE TANKAN LARGE MFG INDEX FORECAST AT +12
- BOJ JUNE TANKAN LARGE NON-MFG INDEX SEEN AT +28X
Japanese firms' one-year, three- and five-year inflation expectations rose over Q1, holding above the Bank of Japan's 2% target and supporting the view that inflationary norms are changing, the BOJ March Tankan survey released on Tuesday showed. On average, companies saw the annual consumer inflation rate at 2.5% in March, up from +2.4% in December. They also saw a rise of 2.4% three years ahead and a 2.3% increase within five years, up from 2.3% and 2.2%, respectively.
AUSTRALIA DATA (MNI): Retail Spending Maintaining Steady Growth
- AUSTRALIA FEB RETAIL SALES +0.2% M/M
February retail sales were slightly weaker than expected rising 0.2% m/m after 0.3% with annual growth moderating 0.2pp to 3.6%. Looking through volatility from seasonal discounting, retail spending is in line with rates seen since October but 3-month momentum has slowed. The pickup in consumer confidence from lower inflation & rates should support the upward trend in retail spending going forward.
FOREX: USD Index Holds Ground in Penultimate Pre-Liberation Session
- The USD Index holds above the 104.00 handle in the penultimate session before Wednesday's tariff announcement, with the near-term trajectory of the USD still subject to risk appetite and the market's inability to price the global trade picture. This leaves the greenback subject to the whims of equities - which are mixed so far Tuesday having bounced off the pullback lows. This still leaves the e-mini S&P within range of support layered between 5533.75-5559.75.
- Overnight FX vols are seeing some support - but the contracts won't fully capture Trump's tariff announcement until tomorrow - leaving markets still scratching their heads over quantifying the specific risks this week.
- Scandinavian currencies are modestly outperforming in early trade, undeterred by some uninspiring PMI manufacturing prints from Norway and Sweden. The single currency is off overnight lows, having found demand into the 1.0800 handle, but the bounce is shallow at this stage - contained by the slightly soft Eurozone Core CPI reading: 2.4% vs. Exp. 2.5%.
- US JOLTS job openings data is the Tuesday highlight, with the ISM Manufacturing release set to follow. Markets expect both metrics to deteriorate slightly over the month, and will be the final focus ahead of Wednesday's Rose Garden event, at which Trump is expected to unveil the full details of America's suite of tariffs to be used to rebalance global trade in the US' favour.
BONDS: Core Global FI Recovers From Late Monday Sell Off, Tariff Angst Dominates
Bonds have rallied as growth worries linked to U.S. tariffs (ahead of “Liberation Day”) and a willingness to fade yesterday’s late month-/quarter-end pressure provides support.
- Slightly softer-than-flash Eurozone manufacturing PMI data also provided support.
- In line Eurozone CPI data had no tangible impact.
- Bunds have failed to challenge yesterday’s high, with 10-Year yields also off yesterday’s lows, leaving the post-debt brake shift range in the German long end intact.
- German yields 3-6bp lower, curve flatter. Just passed Schatz supply noted when it comes to curve moves intraday.
- ECB-dated OIS unwinds most of the move that followed yesterday’s hawkish ECB sources piece from BBG, 18.5bp of cuts priced for this month, 61bp of cuts showing through year-end.
- A bid in European equities (which is out of sync with the tariff worry in bonds) factors into EGB spreads vs. Bunds, which are little changed to ~2.5bp tighter on the day, BTPs outperform.
- Gilts rally in sympathy with demand for wider core global FI markets.
- Futures as high at 92.45, eying trendline resistance drawn off the Mar 4 high (92.49). A break there would increase the risks to the bearish short-term technical trend in the contract.
- Yields 5-6bp lower, curve a touch flatter.
- Comments from BoE’s Greene (who historically has hawkish leanings relative to the median MPC member) signal no change in her pre-existing preference for continued gradual rate cuts. 55bp of BoE cuts priced through year-end last.
- Macro cues eyed for the remainder of the session.
EQUITIES: E-Mini S&P Briefly Pierces Key Support and Bear Trigger
Eurostoxx 50 futures traded lower Monday resulting in a breach of key support at 5229.00, the Mar 11 low. The print below this support undermines a bullish theme and signals scope for a deeper retracement. Note that the 5200 handle has also been cleared, opening 5079.00, the Feb 3 low. It is still possible that recent weakness is part of a broader correction. Initial firm resistance to watch is 5343.17, the 20-day EMA. S&P E-Minis maintains a softer tone following recent bearish price action. Attention is on key support and the bear trigger at 5559.75, the Mar 13 low. It has been pierced, a clear break of it would confirm a resumption of the downtrend that started Feb 19, and open 5483.30, a Fibonacci projection. MA studies are in a bear-mode position, highlighting a dominant downtrend. Key short-term resistance has been defined at 5837.25, the Mar 25 high.
- Japan's NIKKEI closed higher by 6.92 pts or +0.02% at 35624.48 and the TOPIX ended 3 pts higher or +0.11% at 2661.73.
- Elsewhere, in China the SHANGHAI closed higher by 12.689 pts or +0.38% at 3348.435 and the HANG SENG ended 87.26 pts higher or +0.38% at 23206.84.
- Across Europe, Germany's DAX trades higher by 268.86 pts or +1.21% at 22434.71, FTSE 100 higher by 67.36 pts or +0.78% at 8650.18, CAC 40 up 67.9 pts or +0.87% at 7858.61 and Euro Stoxx 50 up 54.36 pts or +1.04% at 5302.75.
- Dow Jones mini down 72 pts or -0.17% at 42189, S&P 500 mini down 3.5 pts or -0.06% at 5649.75, NASDAQ mini up 12.5 pts or +0.06% at 19451.25.
Time: 09:50 BST
COMMODITIES: Sharp Move Higher for WTI Futures Monday Undermines Bearish Theme
WTI futures traded sharply higher Monday. This undermines the medium-term bearish condition and instead signals scope for a continuation higher near-term. The rally has exposed the next key resistance at $72.91, the Feb 11 high. Clearance of this level would strengthen the bullish theme. On the downside, initial firm support to watch lies at $68.78, the 20-day EMA. A breach of this level would signal a potential reversal. The trend condition in Gold is unchanged, it remains bullish. The latest rally highlights a bullish start to this week’s session and confirms a continuation of the primary uptrend. The rally also once again, highlights fresh all-time highs for the yellow metal. Sights are on the $3151.5, a Fibonacci projection. Support to watch lies at $3004.9, the 20-day EMA. A pullback would be considered corrective.
- WTI Crude down $0.18 or -0.25% at $71.31
- Natural Gas down $0.02 or -0.39% at $4.105
- Gold spot up $7.17 or +0.23% at $3130.71
- Copper up $6.55 or +1.3% at $509.7
- Silver down $0.09 or -0.27% at $33.9952
- Platinum down $5.67 or -0.57% at $992.05
Time: 09:50 BST
| Date | GMT/Local | Impact | Country | Event |
| 01/04/2025 | - | *** |  US | Domestic-Made Vehicle Sales |
| 01/04/2025 | 1230/1430 |  EU | ECB's Lagarde At AI Conference | |
| 01/04/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 01/04/2025 | 1300/0900 | US | Richmond Fed's Tom Barkin | |
| 01/04/2025 | 1345/0945 | *** | US | S&P Global Manufacturing Index (final) |
| 01/04/2025 | 1400/1000 | *** | US | ISM Manufacturing Index |
| 01/04/2025 | 1400/1000 | * | US | Construction Spending |
| 01/04/2025 | 1400/1000 | *** | US | JOLTS jobs opening level |
| 01/04/2025 | 1400/1000 | *** | US | JOLTS quits Rate |
| 01/04/2025 | 1430/1030 | ** | US | Dallas Fed Services Survey |
| 01/04/2025 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 01/04/2025 | 1630/1830 | EU | ECB's Lane At AI Conference | |
| 02/04/2025 | 0030/1130 | * |  AU | Building Approvals |
| 02/04/2025 | 0900/1000 | * |  GB | Index Linked Gilt Outright Auction Result |
| 02/04/2025 | 1030/1230 | EU | ECB's Schnabel At SciencesPo Conference | |
| 02/04/2025 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 02/04/2025 | 1215/0815 | *** | US | ADP Employment Report |
| 02/04/2025 | 1400/1000 | ** | US | Factory New Orders |
| 02/04/2025 | 1405/1605 | EU | ECB's Lane At AI Conference | |
| 02/04/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 02/04/2025 | 2030/1630 | US | Fed Governor Adriana Kugler | |
| 03/04/2025 | 2200/0900 | * | AU | S&P Global Final Australia Services PMI |
| 03/04/2025 | 2200/0900 | ** | AU | S&P Global Final Australia Composite PMI |
