Equity markets have reacted badly to Donald Trump’s announcement of reciprocal tariffs, which looks set to kick off a ‘trade war’ that will have a negative impact on the global economy. Government bonds are rallying as investors eschew risk and expectations for central bank rate cuts harden, while the dollar has lost further ground after weakening ahead of yesterday’s announcement. The euro is trading at $1.0950 this morning while sterling has hit a new 2025 high of $1.31, leaving EURGBP little changed at £0.8350.
Yesterday’s Events
Asian equity markets were in the red overnight, with the Nikkei in Japan off around 3%, and European stocks are down more than 2% at the start of play this morning, while the futures markets are pointing to falls of 3-4% in the main US indices at the open later today. In government bond markets, US 10-year yields are down around 6bps to 4.05%, while equivalent German and UK yields are about 7bps and 9bps lower at 2.65% and 4.55% respectively. Oil prices have fallen, with Brent down more than $2 to just over $72.5 p/b.
The US administration is imposing a 10% tariff on all countries (effective April 5), which will apply to the UK for example, but there are much higher rates (effective April 9) for those countries with which the US runs large trade deficits in goods, including the European Union (20%), Japan (24%) and China (34%, which is on top of the 20% previously announced). Pharmaceuticals and semi-conductors, both of which have loomed large in Trump’s tariff threats to date, are exempt (for now at least), though the previously announced 25% tariff on autos is effective from today. The tariffs may be “increased if trading partners retaliate” or “decreased if trading partners take significant steps to remedy…trade arrangements with the US.”
The Day Ahead
While the focus today will be on the fall-out from Trump’s tariffs announcement, economic data scheduled include final services PMI readings for March in the main economies; producer prices in the Euro area; and jobless claims and the ISM services index in the US.
Author: Brian Tim Moore
Tel: 1800 30 30 03 / +353 (0)1 790 0000
2 Apr 2025
Today's Talking Points 02.04.2025
Market Commentary
The main currency pairs were not much changed yesterday with the euro and sterling trading in narrow ranges against the dollar either side of $1.08 and $1.29 respectively and EURGBP hovering in and around £0.8350. They are likely to continue treading water today ahead of Trump’s tariffs announcement due at 9pm Irish time tonight. Reports suggest the tariffs will be imposed widely and effective immediately, though whether the tariffs rates are uniform or differentiated(“reciprocal”) is unclear, while other countries, including the EU, have said they will retaliate with tariffs of their own.
Yesterday’s Events
After a torrid first quarter of the year, US stocks chalked up modest gains at the start of Q2 with the S&P 500 and Nasdaq up 0.4% and 0.9% respectively, while European stocks closed almost 1.5% higher. Government bonds extended their recent rally, with yields ended lower on the day, helped by some softer than expected economic data.
Inflation in the Euro area eased in March according to yesterday’s flash release. Headline inflation was in line with the consensus forecast at 2.2%, down from 2.3% in February and just shy of the 2% target, while core inflation was a touch lower than expected at 2.4%, down from 2.6% in February. The decline in core inflation was due entirely to a second consecutive fall in services inflation, to 3.4% from 3.7%, as core goods inflation was unchanged at 0.6%.
The ISM index of manufacturing activity in the US fell back into contractionary territory (<50) last month, coming in at 49.0, with tariffs a widespread concern among survey respondents. Output, new orders and employment all declined in March, while input prices rose partly reflecting the impact of recent tariff increases.
The Day Ahead
Ahead of Trump’s “Liberation Day” announcement tonight, it is quiet in terms of economic data with the ADP private employment report and capital goods orders in the US the only releases of any note.
Author: Brian Tim Moore
Tel: 1800 30 30 03 / +353 (0)1 790 0000
1 Apr 2025
Today's Talking Points 01.04.2025
Market Commentary
Equity markets were under pressure again yesterday though US stocks managed to rally into the close of business. Bond yields headed further south as stocks fell but they finished off their lows of the day. The dollar lost ground initially before recovering later in the session, albeit operating within narrow ranges. The euro and sterling are trading at around $1.08 and $1.29 respectively against the US currency this morning, both a touch weaker than yesterday morning, while EURGBP is little changed at around £0.8370. The release of Euro area inflation data will be a focus for markets this morning, though there’s likely to be some ‘treading of water’ ahead of the Trump tariff announcement tomorrow.
Yesterday’s Events
Elsewhere in markets, UK 10-year bond yields rose yesterday, more than reversing Wednesday’s fall following soft inflation data, though 2-year yields ended marginally lower. US yields were similarly mixed, with 2-year yields a touch lower but 10-year yields a little higher, while German yields fell across the curve led by a decline in 2-year yields (of circa 6bps). Meanwhile, equity markets headed further south, as they continue to be unnerved by Trump’s tariffs, though losses across US and European stocks were relatively modest at around half a percent.
Ahead of Euro area inflation data this morning, inflation in Germany eased for a second consecutive month in March according to yesterday’s flash release, falling to 2.3% from 2.6% in February. Core inflation – excluding food and energy prices – looks to have fallen last month too, helped by another decline in services inflation.
According to a Bloomberg report yesterday, the ECB Governing Council is undecided about cutting interest rates again at this month’s meeting (April 17th), with the more dovish members of the Council willing to stay on hold if more time is needed “to assess data”. The market pared back expectations for a cut slightly following the report, though it still sees about a 70% chance of a 25bps reduction in the deposit rate.
The Day Ahead
Today’s Euro area inflation data are expected to show headline and core inflation eased to 2.2% and 2.5% in March (from 2.4% and 2.6% in February), according to the consensus forecast. Other data due include Euro area unemployment and job openings and the ISM manufacturing index in the US.
Author: Brian Tim Moore
Tel: 1800 30 30 03 / +353 (0)1 790 0000
31 Mar 2025
Today's Talking Points 31.03.2025
Market Commentary
Bonds rallied strongly on Friday as equity markets sold off sharply ahead of Trump’s reciprocal tariffs announcement this week (with the rout in stocks continuing in Asian trading overnight). In this context, it was relatively calm in FX with the main currency pairs not much changed on Friday, nor indeed on the week as a whole, though the euro gained a little ground against both the dollar and sterling. The single currency is trading at around $1.0840 and £0.8360 respectively this morning, while the pound has edged up over $1.2950 against the dollar. While “Liberation Day” on Wednesday will be the main focus for markets this week, there’s some important economic data due too including Euro area inflation (Tuesday) and the US employment report (Friday).
Yesterday’s Events
US Treasuries led the rally in bonds on Friday with 10-year yields declining by around 10bps on the day, while equivalent UK and German yields fell by 8bps and 5bps respectively. Yields are lower again this morning as equity markets remain on the back foot. The Nikkei in Japan was down almost 4% lower overnight, while European stocks are off 1% at the start of play today after shedding 1% on Friday. US stocks look set to open lower later today too, after sharp losses on Friday, led by the Nasdaq which fell by almost 3%.
Friday’s inflation data in the US were a touch firmer than expected. Headline and core PCE prices rose by 0.3% and 0.4% respectively in February, leaving the annual rate of headline inflation unchanged at 2.5% but pushing the core rate up to 2.8% (the latter has been stuck in a range of 2.6% to 2.9% since April last year). The data will reinforce the Fed’s view, which was reiterated by a number of members last week, that it is appropriate to keep interest rates on hold for now.
Economic confidence in the Euro area remains relatively subdued according to the European Commission’s latest Economic Sentiment Indicator. It fell back in March, led by a notable decline in confidence in the services sector, and remains consistent with a continuation of just modest economic growth in the zone.
The Day Ahead
Looking to the day ahead, it is relatively quiet on the data front with mortgage approvals & lending for February in the UK. As mentioned, Euro area inflation for March is due tomorrow, as is the ISM index of manufacturing in the US, while later in the week, the ISM services index is published on Thursday ahead of the key employment (payrolls) report on Friday.
Author: Brian Tim Moore
Tel: 1800 30 30 03 / +353 (0)1 790 0000
27 Mar 2025
Today's Talking Points 27.03.2025
Market Commentary
The expectation that Donald Trump would announce a 25% tariff on auto imports, which he duly delivered, weighed on equity markets yesterday, while the dollar rose to highs of circa $1.0730 and $1.2870 against the euro and sterling respectively though it has since eased back to around $1.0760 and $1.29. The euro continues to drift down against the pound, trading at £0.8335 this morning, the lower end of the range of about £0.8240 to £0.8475 that has prevailed since the start of the year.
Yesterday’s Events
In equity markets, the S&P 500 in the US shed around 1% while European stocks lost a bit more than 1%, with the latter down another 1% at the open this morning. In government bond markets, UK yields ended marginally lower on the back of softer than expected inflation data, with the Chancellor’s Spring Statement having little impact, while US yields were marginally higher on the day. German yields, which finished broadly flat yesterday, are lower at the start of play today.
In addition to the announcement of 25% tariffs on autos (effective 3 April) and auto parts (effective no later than 3 May), Donald Trump also said “we’ll be doing tariffs on pharmaceuticals in order to bring our industry back” (to the US). Meanwhile, ahead of the expected announcement of reciprocal tariffs next Tuesday, the Financial Times reports that the “assessment” of the EU’s trade commissioner (following talks in Washington) is that tariffs of about 20% will be imposed on the EU.
The OBR has halved its forecast for GDP growth in the UK this year, to 1% from 2%, citing “a more challenging and uncertain (economic) outlook.” It also projected that absent the corrective action (mainly spending cuts) announced in her Spring Statement, the Chancellor would have breached her fiscal rule that the current budget should be in balance or surplus in 2029-30. A surplus of £9.9bn (0.3% of GDP) is now projected for 2029-30, the same as in October, though as the OBR notes, this “headroom” remains “a small margin against the risk of further shocks to interest rates, productivity, or global trade.”
The Day Ahead
For the day ahead, economic data scheduled include money supply & credit growth in the Euro area – the ECB is closely watching the latter to see how lower interest rates are transmitting to lending in the economy – and jobless claims and a final estimate of Q4 2024 GDP in the US.
Dealer Comments
Today's Talking Points 03.04.2025
Market Commentary
Equity markets have reacted badly to Donald Trump’s announcement of reciprocal tariffs, which looks set to kick off a ‘trade war’ that will have a negative impact on the global economy. Government bonds are rallying as investors eschew risk and expectations for central bank rate cuts harden, while the dollar has lost further ground after weakening ahead of yesterday’s announcement. The euro is trading at $1.0950 this morning while sterling has hit a new 2025 high of $1.31, leaving EURGBP little changed at £0.8350.
Yesterday’s Events
Asian equity markets were in the red overnight, with the Nikkei in Japan off around 3%, and European stocks are down more than 2% at the start of play this morning, while the futures markets are pointing to falls of 3-4% in the main US indices at the open later today. In government bond markets, US 10-year yields are down around 6bps to 4.05%, while equivalent German and UK yields are about 7bps and 9bps lower at 2.65% and 4.55% respectively. Oil prices have fallen, with Brent down more than $2 to just over $72.5 p/b.
The US administration is imposing a 10% tariff on all countries (effective April 5), which will apply to the UK for example, but there are much higher rates (effective April 9) for those countries with which the US runs large trade deficits in goods, including the European Union (20%), Japan (24%) and China (34%, which is on top of the 20% previously announced). Pharmaceuticals and semi-conductors, both of which have loomed large in Trump’s tariff threats to date, are exempt (for now at least), though the previously announced 25% tariff on autos is effective from today. The tariffs may be “increased if trading partners retaliate” or “decreased if trading partners take significant steps to remedy…trade arrangements with the US.”
The Day Ahead
While the focus today will be on the fall-out from Trump’s tariffs announcement, economic data scheduled include final services PMI readings for March in the main economies; producer prices in the Euro area; and jobless claims and the ISM services index in the US.
2 Apr 2025
Today's Talking Points 02.04.2025
Market Commentary
The main currency pairs were not much changed yesterday with the euro and sterling trading in narrow ranges against the dollar either side of $1.08 and $1.29 respectively and EURGBP hovering in and around £0.8350. They are likely to continue treading water today ahead of Trump’s tariffs announcement due at 9pm Irish time tonight. Reports suggest the tariffs will be imposed widely and effective immediately, though whether the tariffs rates are uniform or differentiated(“reciprocal”) is unclear, while other countries, including the EU, have said they will retaliate with tariffs of their own.
Yesterday’s Events
After a torrid first quarter of the year, US stocks chalked up modest gains at the start of Q2 with the S&P 500 and Nasdaq up 0.4% and 0.9% respectively, while European stocks closed almost 1.5% higher. Government bonds extended their recent rally, with yields ended lower on the day, helped by some softer than expected economic data.
Inflation in the Euro area eased in March according to yesterday’s flash release. Headline inflation was in line with the consensus forecast at 2.2%, down from 2.3% in February and just shy of the 2% target, while core inflation was a touch lower than expected at 2.4%, down from 2.6% in February. The decline in core inflation was due entirely to a second consecutive fall in services inflation, to 3.4% from 3.7%, as core goods inflation was unchanged at 0.6%.
The ISM index of manufacturing activity in the US fell back into contractionary territory (<50) last month, coming in at 49.0, with tariffs a widespread concern among survey respondents. Output, new orders and employment all declined in March, while input prices rose partly reflecting the impact of recent tariff increases.
The Day Ahead
Ahead of Trump’s “Liberation Day” announcement tonight, it is quiet in terms of economic data with the ADP private employment report and capital goods orders in the US the only releases of any note.
1 Apr 2025
Today's Talking Points 01.04.2025
Market Commentary
Equity markets were under pressure again yesterday though US stocks managed to rally into the close of business. Bond yields headed further south as stocks fell but they finished off their lows of the day. The dollar lost ground initially before recovering later in the session, albeit operating within narrow ranges. The euro and sterling are trading at around $1.08 and $1.29 respectively against the US currency this morning, both a touch weaker than yesterday morning, while EURGBP is little changed at around £0.8370. The release of Euro area inflation data will be a focus for markets this morning, though there’s likely to be some ‘treading of water’ ahead of the Trump tariff announcement tomorrow.
Yesterday’s Events
Elsewhere in markets, UK 10-year bond yields rose yesterday, more than reversing Wednesday’s fall following soft inflation data, though 2-year yields ended marginally lower. US yields were similarly mixed, with 2-year yields a touch lower but 10-year yields a little higher, while German yields fell across the curve led by a decline in 2-year yields (of circa 6bps). Meanwhile, equity markets headed further south, as they continue to be unnerved by Trump’s tariffs, though losses across US and European stocks were relatively modest at around half a percent.
Ahead of Euro area inflation data this morning, inflation in Germany eased for a second consecutive month in March according to yesterday’s flash release, falling to 2.3% from 2.6% in February. Core inflation – excluding food and energy prices – looks to have fallen last month too, helped by another decline in services inflation.
According to a Bloomberg report yesterday, the ECB Governing Council is undecided about cutting interest rates again at this month’s meeting (April 17th), with the more dovish members of the Council willing to stay on hold if more time is needed “to assess data”. The market pared back expectations for a cut slightly following the report, though it still sees about a 70% chance of a 25bps reduction in the deposit rate.
The Day Ahead
Today’s Euro area inflation data are expected to show headline and core inflation eased to 2.2% and 2.5% in March (from 2.4% and 2.6% in February), according to the consensus forecast. Other data due include Euro area unemployment and job openings and the ISM manufacturing index in the US.
31 Mar 2025
Today's Talking Points 31.03.2025
Market Commentary
Bonds rallied strongly on Friday as equity markets sold off sharply ahead of Trump’s reciprocal tariffs announcement this week (with the rout in stocks continuing in Asian trading overnight). In this context, it was relatively calm in FX with the main currency pairs not much changed on Friday, nor indeed on the week as a whole, though the euro gained a little ground against both the dollar and sterling. The single currency is trading at around $1.0840 and £0.8360 respectively this morning, while the pound has edged up over $1.2950 against the dollar. While “Liberation Day” on Wednesday will be the main focus for markets this week, there’s some important economic data due too including Euro area inflation (Tuesday) and the US employment report (Friday).
Yesterday’s Events
US Treasuries led the rally in bonds on Friday with 10-year yields declining by around 10bps on the day, while equivalent UK and German yields fell by 8bps and 5bps respectively. Yields are lower again this morning as equity markets remain on the back foot. The Nikkei in Japan was down almost 4% lower overnight, while European stocks are off 1% at the start of play today after shedding 1% on Friday. US stocks look set to open lower later today too, after sharp losses on Friday, led by the Nasdaq which fell by almost 3%.
Friday’s inflation data in the US were a touch firmer than expected. Headline and core PCE prices rose by 0.3% and 0.4% respectively in February, leaving the annual rate of headline inflation unchanged at 2.5% but pushing the core rate up to 2.8% (the latter has been stuck in a range of 2.6% to 2.9% since April last year). The data will reinforce the Fed’s view, which was reiterated by a number of members last week, that it is appropriate to keep interest rates on hold for now.
Economic confidence in the Euro area remains relatively subdued according to the European Commission’s latest Economic Sentiment Indicator. It fell back in March, led by a notable decline in confidence in the services sector, and remains consistent with a continuation of just modest economic growth in the zone.
The Day Ahead
Looking to the day ahead, it is relatively quiet on the data front with mortgage approvals & lending for February in the UK. As mentioned, Euro area inflation for March is due tomorrow, as is the ISM index of manufacturing in the US, while later in the week, the ISM services index is published on Thursday ahead of the key employment (payrolls) report on Friday.
27 Mar 2025
Today's Talking Points 27.03.2025
Market Commentary
The expectation that Donald Trump would announce a 25% tariff on auto imports, which he duly delivered, weighed on equity markets yesterday, while the dollar rose to highs of circa $1.0730 and $1.2870 against the euro and sterling respectively though it has since eased back to around $1.0760 and $1.29. The euro continues to drift down against the pound, trading at £0.8335 this morning, the lower end of the range of about £0.8240 to £0.8475 that has prevailed since the start of the year.
Yesterday’s Events
In equity markets, the S&P 500 in the US shed around 1% while European stocks lost a bit more than 1%, with the latter down another 1% at the open this morning. In government bond markets, UK yields ended marginally lower on the back of softer than expected inflation data, with the Chancellor’s Spring Statement having little impact, while US yields were marginally higher on the day. German yields, which finished broadly flat yesterday, are lower at the start of play today.
In addition to the announcement of 25% tariffs on autos (effective 3 April) and auto parts (effective no later than 3 May), Donald Trump also said “we’ll be doing tariffs on pharmaceuticals in order to bring our industry back” (to the US). Meanwhile, ahead of the expected announcement of reciprocal tariffs next Tuesday, the Financial Times reports that the “assessment” of the EU’s trade commissioner (following talks in Washington) is that tariffs of about 20% will be imposed on the EU.
The OBR has halved its forecast for GDP growth in the UK this year, to 1% from 2%, citing “a more challenging and uncertain (economic) outlook.” It also projected that absent the corrective action (mainly spending cuts) announced in her Spring Statement, the Chancellor would have breached her fiscal rule that the current budget should be in balance or surplus in 2029-30. A surplus of £9.9bn (0.3% of GDP) is now projected for 2029-30, the same as in October, though as the OBR notes, this “headroom” remains “a small margin against the risk of further shocks to interest rates, productivity, or global trade.”
The Day Ahead
For the day ahead, economic data scheduled include money supply & credit growth in the Euro area – the ECB is closely watching the latter to see how lower interest rates are transmitting to lending in the economy – and jobless claims and a final estimate of Q4 2024 GDP in the US.