9th April 2025

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Risk off during Asia as Trump's additional tariffs came into place while acute selling in Treasuries accentuated concerns around the bond basis trade and heightened calls for policy intervention, although losses have pared into the European open. The Dollar has failed to find a bid despite stocks and bonds selling, raising questions over confidence in the global reserve currency whilst havens such as Swissy and Yen are outperforming. The Yuan dipped to new recent lows after the PBoC weakened the fix again. However, China's stock market was an area of outperformance amid reports of state buying and impending policy stimulus measures.

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TRADE:

• US President Trump's "reciprocal" tariffs on dozens of countries took effect on Wednesday, including massive 104% duties on Chinese goods. (RTRS)
• Trump, at a GOP event, accused China of manipulating its currency to offset the impact of U.S. tariffs. "You got to hand it to them. They're manipulating their currency today as an offset against the tariffs". (RTRS)
• Trump said the US is taking in $2 billion per day from tariffs. (RTRS)
• Trump said, “We’re going to be announcing very shortly a major tariff on pharmaceuticals [giving no further details]... And when they hear that, they will leave China. They will leave other places because they have to sell — most of their product is sold here and they’re going to be opening up their plants all over the place.” (Politico)
• Many countries say they are still waiting for responses from the White House to establish trade talks despite the recent opening up to negotiations in public comments from US officials, indicative of the likely long time to wait until deals can be made. (Politico)
• FT sources suggest US Treasury Sec Bessent and USTR Greer, who have been charged with leading trade talks, are more qualified to negotiate and not inflame as compared to other trade hawks in the administration. (FT)
• US trade advisor Navarro, when asked by the FT about talks with countries on trade, said, “We like what we have been hearing.” (FT)
• Japanese Finance Minister Kato said on Wednesday trade negotiations with the US could include discussions on foreign exchange rates. Kato also ruled out using the country's US Treasury holdings as a bargaining tool against Trump's tariffs. (RTRS)
• The EU's retaliatory tariffs appear to be strategically targeting exports of Republican-led states. (Politico)
• Spain Is Pushing for EU Pivot to China to Counter Trump Tariffs. (BBG)
• Taiwan hopes that it can come to a quick agreement with the US to resolve tariffs and has already approached Washington to discuss the issue, a senior Taiwanese official said on Wednesday. (RTRS)
• South Korea’s government has announced emergency-support measures for the country’s auto sector, as it rushed to ease the impact of U.S. President Trump’s tariffs. (WSJ)

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MACRO:

• WSJ's Timiraos says Trump's tariff's have put the Fed in a "no win" situation with prices likely to rise in the coming months as tariffs bite. Said preemptive cuts aren’t in the cards and it’s not at all clear how much they’d cushion the hit before it comes. (WSJ)
• executives warn tariff uncertainty will make it too risky to invest billions of dollars in building new American plants.
• Carmakers are holding thousands of vehicles at US ports and temporarily halting shipments as they seek to minimise the trade war impact, according to some executives. (FT)
• The top investor at Australia’s largest superannuation fund says the US will continue to dominate its new investments despite market chaos caused by tariffs, in a vote of confidence from one of the most active foreign investors. (FT)
• Analysts warn the prices of leather goods, clothing, furniture and consumer electronics are expected to increase sharply for US households in the coming months because the country relies heavily on imports from nations targeted by tariffs. (FT)
• China's top leaders plan to convene a meeting as early as Wednesday to discuss measures to boost the economy and stabilise the capital markets, according to Reuters sources. Some of the measures could be implemented in the coming weeks. (RTRS)
• The PBoC weakened the yuan’s daily reference rate for a fifth straight session on Wednesday, but moderated the pace of its adjustment. (BBG)
• Investors are unable to carry out some onshore yuan spot transactions that imply the currency is outside the weak end of its 2% trading band against the dollar on Wednesday, according to traders. (BBG)
• Wall Street starts to cut China growth forecasts as trade tensions with U.S. escalate. (CNBC)
• Goldman suggests the roughly 100% US tariff on Chinese goods set to go into effect Wednesday would reduce the growth of China’s economy by some 2.4 percentage points. (WSJ)
• Chinese investors funneled a record amount of cash into gold-backed ETFs last week, drawn by the safety of the asset as combative trade war rhetoric from the world’s biggest economies shakes global markets. (BBG)
• Japanese government bonds plunged, with the selloff concentrated in longer-dated debt, as elevated market volatility prompted investors to trim their exposure to fluctuating yields. (BBG)
• Japan's Ministry of Finance, Financial Services Agency and the Bank of Japan will hold a meeting of senior officials from 4 p.m. (0700 GMT) to discuss international financial markets, they said on Wednesday. (RTRS)
• BoJ Governor Ueda the central bank will continue to raise interest rates if the economy keeps recovering, but will scrutinise "without pre-conception" whether its economic forecasts materialise. (RTRS)
• The Japanese government will release stockpiled rice every month until July in an effort to rein in rising prices, farm minister Taku Eto said. (RTRS)
• UK GDP will grow just 0.8 per cent this year, according to an average of 10 forecasts made after Trump unveiled aggressive global tariffs, down from a consensus of 1.2 per cent expected in January. (FT)
• The RBNZ bank cut its benchmark rate on Wednesday by 25bps to 3.50%, as widely expected, signalling a greater readiness to lower borrowing costs further as the economy faces headwinds from weak demand and trade barriers. (RTRS)
• The Australian dollar may have plunged lower this month, but some macro hedge funds are taking a bullish view on the currency in the foreign exchange option market, according to Barclays Bank. (BBG)
• The IMF said on Tuesday it reached a staff-level agreement with Argentina on a 48-month extended fund facility totaling $20 billion. (RTRS)
• Big Unwinding of Leveraged Bets Pummels Taiwan Stock Market. (BBG)
• India’s central bank cut its policy rate by 25 basis points to 6%, marking its lowest level since September 2022 as growth concerns mount in the world’s fifth largest economy. (CNBC)
• Goldman Sachs expects copper to drop to a monthly average low of USD 8.3k/T in Q3-2025. Forecast a 100k/T surplus in 2025 (prev. exp. 180k/T deficit). Forecasts skewed to downside given risks to demand. (Newsquawk)

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GEOPOLITICAL:

• UK’s defence and tech industries have urged EU and UK leaders to step up efforts to clinch a new security pact with Brussels next month amid concerns that the talks risk getting bogged down in “horse-trading”. (FT)

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EQUITIES:

• Many large bank executives say they hadn’t had a substantive discussion with President Trump since the pandemic hammered markets in 2020, according to sources. (WSJ)
• Elon Musk’s Starlink is in a fight with Canada’s top telecoms group over accessing millions of dollars in subsidies, as the country’s growing anti-US sentiment puts the billionaire’s satellite business under further scrutiny. (FT)
• Peabody Energy said it is reviewing an up to $3.78 billion deal to buy Anglo American’s steelmaking coal operations following a fire at an Australian mine. (WSJ)
• KKR Agrees to Buy UK Medical Landlord Assura for £1.6 Billion. (BBG)
• Morgan Stanley suggests TSMC may rein in CoWoS expansion due to US tariffs, forecasting 2026 CoWoS capacity at 90,000 wafers per month, up from 70,000 this year, and versus a consensus 2026 view of 105,000-125,000. (CTEE via @dnystedt)
• Foxconn wants to cooperate with Nissan but is currently not engaging with the Japanese automaker, an executive told Nikkei. (Nikkei)
• JPMorgan says that while it's too soon to call a trough, it sees this period of weakness as an opportunity to accumulate exposure to copper and gold equities and/or miners that are strategically vulnerable with its top picks across European metals and mining stocks being Antofagasta, Rio Tinto, Lundin Mining, Fresnillo, AngloGold, and Hochschild. (RTRS)

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