Ahead of the tariff announcements markets are trading cautiously. Asian stock markets are marginally higher whilst European futures are indicating a marginally softer opening. UST yields are up but have mainly been going sideways during Asian hours and the Eurex complex is essentially unchanged from last night.
EUR/USD is hovering just under 1.08 and GBP just above 1.29, also essentially unchanged. Brent crude and gold exhibit the same patterm while cryptos are down by around 1-2%.
Bloomberg reports that Trump’s team is still finalising what the exact tariff model that will be announced later today will be with options ranging from one flat tax to multiple rates for various countries under consideration.The WSJ reports that one option under consideration is ‘an across-the-board tariff’ applied to only selected countries that would be lower than the 20% tariff option discussed. Treasury secretary Bessent said, according to CNBC, that the announcement willrepresent the highest level they will go and countries can ‘take steps’ to bring them down.
UK media reports that the UK government is contemplating reducing the digital service tax rate levied on tech companies whilst at the same time lowering the threshold of when the tax applies to capture a wider range of companies. The move would be designed to avoid being targeted by US tariffs.
Fed’s Goolsbee said that uncertainty around tariffs could leave consumers and businesses with reduced spending which could be ‘a mess’.
He also said that ‘in theory’ tariffs should lead to a transitory effect on prices, but retaliation might complicate that picture. On geopolitics, Russia said that it can’t accept the current proposal for a ceasefire in Ukraine.
Donald Trump is set to make an announcement on reciprocal tariffs today at a press conference around 3pm EDT in the White House Rose Garden. April 2nd has long been the date on the calendar where markets have hoped to get some clarity or resolution to the trade war. Expectations for what exactly markets are going to get today are still very unclear. Based on remarks by Trump’s Press Secretary, the announcements will be done on a country-by-countrybasis, rather than an industry basis. However, this raises fresh issues such as how to stop firms circumventing tariffs by re-exporting through a lower tariff country.
The ECB’s Schnabel is speaking in Paris on the question of “Reviving growth in the euro area”. The slides will be made available on the ECB’s website but not the text. She is likely to argue that the ECB should take a hands -off approach to solving structural causes of weak euro area growth. The ECB’s Chief Economist Philip Lane is moderating a policy roundtable on the impact and challenges of AI. The ECB’s Holzmann is speaking on unconventional monetary policy at the Romanian central bank.
The Fed’s Kugler is speaking on inflation expectations and monetary policy. There will be a Q&A and text released. She is seen as one of the more dovish members of the FOMC and is a voter for the next three years.
