• US stocks were subdued in what was a choppy session but settled well off worst levels, as markets continued to digest Trump's latest tariff actions following the announcement of a 25% tariff on all autos made outside of the US from April 2nd, while cautiousness remains ahead of April 2nd "Liberation Day" and what the President decides to implement. Participants also reflected on a slew of data releases which ultimately printed mixed and did little to spur risk appetite.
• USD weakened and largely pared Wednesday's gains as auto tariff confirmation arrived from US President Trump with headwinds from the continued growth concerns and as the tariffs are not effective immediately but will go into effect on April 2nd, alongside the reciprocal tariffs, on which Trump has previously said he will likely be more "lenient than reciprocal". There were several data releases which were ultimately varied as final revisions to the Q4 GDP report were mixed in which GDP and GDP sales were revised higher, core PCE prices and the GDP deflator estimates were lowered, as was consumer spending. Separately, initial claims continued to hover around 225k and continued claims fell more than expected, while participants now await the monthly Core PCE data.
• Looking ahead, highlights include Tokyo CPI, BoJ Summary of Opinions from the March Meeting, Supply from Australia.

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LOOKING AHEAD

• Highlights include Tokyo CPI, BoJ Summary of Opinions from the March Meeting, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were subdued in what was a choppy session but settled well off worst levels, as markets continued to digest Trump's latest tariff actions following the announcement of a 25% tariff on all autos made outside of the US from April 2nd, while cautiousness remains ahead of April 2nd "Liberation Day" and what the President decides to implement. Participants also reflected on a slew of data releases which ultimately printed mixed and did little to spur risk appetite.
• SPX -0.33% at 5,693, NDX -0.59% at 19,799, DJI -0.37% at 42,300, RUT -0.39% at 2,066.
• Click here for a detailed summary.

TARIFFS/TRADE

• It was initially reported that US President Trump and Canadian PM Carney held their first call today, according to Reuters citing sources. However, a spokeswoman for PM Carney commented shortly after that Carney has not spoken to Trump.
• Canadian PM Carney said their response to these latest tariffs is to fight and they will fight the US tariffs with retaliatory trade actions of their own, while he added it is clear the US is no longer a reliable partner but noted it is possible that with comprehensive negotiations, they will be able to restore some trust with the US. Furthermore, Carney said US President Trump reached out on Wednesday night to schedule a call and he will speak to Trump in the next day or two but also noted that if President Trump threatens them again, they will fight back with everything they have to get the best deal for Canada.
• Ontario Premier Ford said he just spoke to PM Carney and agreed not to impose countermeasures until April 2nd, while he added there was no assurance from US Commerce Secretary Lutnick on softening of tariffs.
• US is to target all of Brazil’s sectors if it imposes tariffs on it, according to Folha.
• Mexican President Sheinbaum said US President Trump's auto tariffs are to go into effect April 3rd and they are going to give an integral response to tariffs after April 2nd. Furthermore, she stated that there should not be tariffs within a free trade agreement and the door is open to talks with the US, while she will do what is best for Mexico. It was separately reported that Mexico’s Economy Minister said they are at a negotiating table with the US Commerce Secretary to protect auto parts made in Mexico.
• EU Commission spokesperson said the EU is preparing its response to new import tariffs but there is no timing yet, while the EU's answer will be timely, robust and well-calibrated.
• French President Macron said he will speak with US President Trump again in the "coming hours" and noted that tariffs are value-destructive for everyone. Macron said Europeans will respond to the US measures by reciprocating, while he stated that the US asked Europe to spend more on defence and as such it is not coherent for the US to impose tariffs on Europe.
• German Chancellor Scholz said US President Trump's decision on car tariffs is wrong.
• UK Chancellor Reeves said the UK is in “intense negotiations” with the US on all tariffs and “working on” exempting the UK because “we don't run a surplus”, according to BBC's Islam.
• China's Vice Premier He Lifeng met EU Trade Commissioner Sefcovic in Beijing and is willing to strengthen dialogue and communication with the EU and properly handle economic and trade disputes, according to Xinhua.
• China rejected US President Trump's offer of tariff waivers in exchange for a TikTok deal, according to AFP.
• India's Trade Minister said negotiations with the US are progressing well.

NOTABLE HEADLINES

• US HHS Secretary Kennedy Jr. is planning 10k job reductions in his department, according to WSJ.
• US CBO projects FY2055 USD budget deficit at 7.3% of GDP (prev. 6.2% in FY25) based on current law and projects debt held by the public in FY 2055 at 156% of FDP (prev. 100% in 2025).

DATA RECAP

• US GDP Final (Q4) 2.4% vs. Exp. 2.3% (Prev. 2.3%)
• US Core PCE Prices Final (Q4) 2.6% vs. Exp. 2.7% (Prev. 2.7%)
• US Adv Goods Trade Balance (Feb) -147.91B (Prev. -155.57B)
• US Wholesale Inventories Adv (Feb) 0.3% (Prev. 0.8%)
• US Retail Inventories Ex-Auto Adv (Feb) 0.1% (Prev. 0.5%)
• US Pending Sales Change MM (Feb) 2.0% vs. Exp. 1.0% (Prev. -4.6%)
• US Pending Homes Index (Feb) 72.0 (Prev. 70.6)
• US KC Fed Manufacturing (Mar) 1.0 (Prev. -13.0)
• US KC Fed Composite Index (Mar) -2.0 (Prev. -5.0)
• US Initial Jobless Claims 224k vs. Exp. 225k (Prev. 223k, Rev. 225k)
• US Continued Jobless Claims 1.856M vs. Exp. 1.888M (Prev. 1.892M, Rev. 1.881M)

FX

• USD weakened and largely pared Wednesday's gains as auto tariff confirmation arrived from US President Trump with headwinds from the continued growth concerns and as the tariffs are not effective immediately but will go into effect on April 2nd, alongside the reciprocal tariffs, on which Trump has previously said he will likely be more "lenient than reciprocal". There were several data releases which were ultimately varied as final revisions to the Q4 GDP report were mixed in which GDP and GDP sales were revised higher, core PCE prices and the GDP deflator estimates were lowered, as was consumer spending. Separately, initial claims continued to hover around 225k and continued claims fell more than expected, while participants now await the monthly Core PCE data.
• EUR gained and briefly returned to the 1.0800 handle against the softer dollar, while tariffs remained the main focus and an EU Commission spokesperson said the EU is preparing its response to new import tariffs but there is no timing yet and the EU's answer will be timely, robust and well-calibrated.
• GBP benefitted as the UK is seen to be less tariff-exposed but with the upside in GBP/USD capped by resistance near the 1.3000 level.
• JPY continued its recent weakening trend and USD/JPY ascended back above the 151.00 level, while the attention now turns to incoming Tokyo CPI data which provides a leading signal to national price trends.
• Norges Bank maintained its Key Policy Rate at 4.50% as expected, while it stated the current assessment of the outlook implies that the policy rate will most likely be reduced in the course of 2025. Furthermore, Q4-2025 Repo Path is seen at 4.21% (prev. 3.80%).
• Mexican Central Bank lowered its Interest Rate by 50bps to 9.00% vs. Exp. 9.00% (prev. 9.50%) with the board unanimous on the rate decision. Banxico estimates it could continue calibrating the monetary policy stance and consider adjusting it in similar magnitudes, while it added that the Mexican economy is expected to exhibit weakness once again in the first quarter of 2025.

FIXED INCOME

• T-notes were choppy but ultimately steepened amid the subdued risk tone, tariff updates, US economic data and supply.

COMMODITIES

• Oil prices eked slight gains and traded within narrow parameters as Trump tariffs dominated macro newsflow and sentiment.
• Indian port authorities denied permission to a ship loaded with Russian oil due to inadequate documentation, while the ship was carrying around 800k bbls, according to Reuters sources.

GEOPOLITICAL

MIDDLE EAST

• Israeli Military said sirens sounded in several areas in Israel following projectile launching from Yemen.
• US official said the Pentagon is considering plans to deploy additional forces in the Middle East, according to Al Arabiya.
• Advisor to Iran’s Supreme Leader Khamenei said Iran is “ready” for indirect talks with the US, according to Al Arabiya.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said Ukraine will give US evidence of Russia violating the ceasefire and expects a reaction from Washington as promised. It was also reported that Zelensky said the US is 'constantly' changing terms of the minerals deal.
• Ukraine reportedly attacked Russian energy infrastructure facilities in the past day, according to TASS. However, Ukraine's foreign ministry spokesman later stated that neither Russia nor Ukraine have attacked each other's energy infrastructure since March 25th.
• US is reportedly said to seek control of infrastructure investment in Ukraine and all investment in Ukraine resources, according to Bloomberg.
• Russia and US teams may meet regarding Ukraine in Riyadh in mid-April, according to TASS.
• Russian Deputy Foreign Minister said given the current circumstances, it is impossible that Russia will make any concessions on strategic stability and there is no concrete agreement on the Black Sea deal, according to TASS.
• French President Macron said they will continue to support in the short-term Ukraine and the Ukraine army, while he added that Russia has failed to respond to a ceasefire demand and continues with strikes. Macron said several countries made additional military and financial commitments for Ukraine on Thursday, as well as noted it is not the time to lift sanctions against Russia which all countries agreed on and they agreed to continue to put pressure on Russia and Russia's shadow fleet.

OTHER

• Russian President Putin said the US is serious about Greenland and will promote its interests in the Arctic, while he noted concern that NATO sees the North as the possible foothold for conflicts. Putin said Russia has never threatened anyone in the Arctic, but they are closely watching the situation and stated there is a possibility for cooperation in the Arctic, including with Western states.
• US Secretary of State Rubio warned if Venezuela attacked Guyana or Exxon (XOM), "it would be a very bad day" for them. It was also reported that the Guyanese President agreed with the US to further integrate energy production after a meeting with US Secretary of State Rubio.

ASIA-PAC

NOTABLE HEADLINES

• China is seen to have stepped up fiscal support and accelerated bond issuance to the highest on record in Q1 2025, issuing a total of CNY 3.28tln, according to Reuters calculations.

EU/UK

NOTABLE HEADLINES

• BoE's Dhingra said still at orderly fragmentation at this point and serious price pressures in disorderly fragmentation.
• ECB's de Guindos said the ECB is optimistic with regard to inflation and believes that they will converge towards the target in coming quarters on a stable basis. De Guindos added that the main impact of tariffs is on growth and short-lived impact on inflation.
• ECB's Villeroy said France needs to bring the deficit back to the 3% mark.