EU trade chief Sefcovic is meeting the Commerce Secretary and USTR today, too. Germany IFO printed in-line, ECB hawks featured, but both were largely overlooked.
Busy Fedspeak and data calendar with New Home sales and Conf. Board Consumer Confidence out simultaneously at 10:00 EDT. Dovish Fed members Kugler and Williams speak at 08:40 and 09:05 respectively. Speaker Johnson, Senator Thune and tax committee members plan to meet today to discuss the budget blueprint, pushing for a target of April 11. President Trump will be signing Executive Orders at 14:00 EDT. In EM, BRL central bank minutes out as we print, MXN retail sales will be backwards looking. No change expected at the HUF CB decision (09:00 EDT).
USD traded broadly flat overnight, with EURUSD holding at 1.08, USDJPY at the 150 handle, with SEK the sole outperformer. “I may give a lot of countries breaks,” Trump teased on Monday. We've seen reports overnight of concessions from different countries, with Reuters reports that India could cut tariffs on USD23bn of US goods due to fears reciprocal tariffs would hit 87% of its US exports worth USD66bn. EU trade chief Maros Sefcovic is scheduled to meet Commerce Secretary Howard Lutnick and USTR Jamieson Greer today on the matter.
UST long-end underperforming as we write, following the European FI tone. Fedspeak and data makes for a busy session today; given tariff risks on the radar, the former may be broadly in-line with recent commentary and cautious. Fed's Kugler (dovish) speaks on the economy, entrepreneurship at 08:40 EDT. Williams gives opening remarks at 09:05 EDT.
New Home Sales at 10:00 EDT has been volatile lately, but we expect a pickup for February at 3.3% vs -10.5% prior (Citi e.) There is likely some residual seasonality in play than a true rebound in housing strength. Conf. Board Consumer Confidence prints simultaneously - our economists expect headline to fall further to 94.7 vs 98.4 last. Near-term inflation expectations should increase further similar to U Mich trends.
US equity futures failed to sustain strength overnight; e-minis trade at 5809. While tariff uncertainties remain, our CETS team highlight that seasonality should be a positive catalyst for the next quarter. The SPX rose 33/49 times in the following quarter by a median of 5.9% and outperformed bond total returns 34/49 times by a median of 270bps. In comparison, 1Q25 performance has been poor for stocks relative to bonds. The S&P 500 is down 4.6% vs. 10-year UST total return of +3.8% through March 21.
Citi D1 - Liberation Plays Interesting note from our European D1 sales team in collaboration with specialist sales. Citi Spec sales flag single stocks at risk, their selection is wrapped up in the basket CGDOEUTR. Citi Equity and Quant strategy reiterate their basket of Tariff sensitive / insulated (stocks with US exposure and low / high US COGS) in CGRBEUTS / CGRBEUTI. Tune into our client call at 08:30 EDT: Citi Equity Trading: Levered ETFs impact and opportunity. Our trading and strategy teams will discuss the growth, impact and investment opportunities related to levered ETF products.
EUR FX trading flat though European stocks trade well. Equity volumes were thin on Monday as market participants wait for further clarity on the tariff front, and despite softened and targeted messaging from Trump, caution is warranted. Investor sentiment will likely not change this week, our sales trader adds. Elsewhere, Germany IFO prints broadly unch. from January, though there were improving trends in manufacturing. Services saw a marginal improvement. Headline business climate came at 86.7 vs 85.2 prior.
ECB hawks Kazimir and Muller said overnight that they couldn't rule out pausing in rate cutting, the latter saying that he was "not sure how much more or when ECB can cut rates". "We are right already now in neutral rate zone" Kazimir added. As an uber hawk, comments are not too surprising and likely not shared with the rest of the committee. Villeroy speaks Wednesday, Schnabel will be interesting on Thursday.
TRY: Turkey Client Call Today with MoF and CBT Governor at 09:00 EDT. Citi and Deutsche Bank are delighted to invite you to join a conference call with Mehmet Şimşek, Turkey Minister of Treasury & Finance and Dr. Fatih Karahan, Turkey Central Bank Governor. Join via Citi Velocity only. A replay will not be available.
Our trader Tomas Pilkauskas writes that there's been lots of interest to sell the front-end (upto 1m) from our clients. Offshore positions are much lighter, we are seeing fading, and most of the positions left are now sticky "We are past the worst" he notes, though politics will still be carefully monitored. Month-end estimates (preliminary). CitiFX Quant asset rebalancing models calls for buying of US equities and Japanese bonds and selling of most other markets. FX hedge rebalancing needs estimate points to net USD buying with average signal strength of 0.8 st.dv. The signal to buy USDJPY is strongest only one to exceed one st.dv.
ICYMI SNAP POLL: How do you think markets are pricing in tariff risks into April 2? Submit your answer here. And in which asset class are tariff risks into April 2 most underpriced?
