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The news media are reporting that JD Vance said that “the US is likely to seal an economic agreement with the UK that benefits both nations. He also added that with the UK, they have a much more reciprocal relationship than they have with Germany for example”.

So, it’s logical to seal a deal with your closest “friends” first. As a reminder, the US imposed a 10% reciprocal tariff on UK and of course the 25% levies on autos, steel and aluminium that Trump slapped on everyone.

We have also an Indian trade official saying that India has decided to go for a path of trade liberalisation with the US. It will be 90 hectic days for the US to strike all the promised deals. Anyway, the point is not about the news, but about the expectations that the market could derive from the first trade deals.

Markets move on future expectations and it doesn’t matter if it’s right or wrong, it’s always in flux and adjusts to new information. The first trade deals could give the markets a rough benchmark on future trade deals and on the likely tariff rates. The key number is 10%. This is what the markets will want to see on average to celebrate easing in trade wars and recessionary fears.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior +0.8%; revised to +0.6%

That’s a stronger reading than expected with the jump largely coming from a rise in output for capital goods (+0.8%) and non-durable consumer goods (+2.8%). There was also an increase in production for intermediate goods (+0.3%), offset slightly by declines in energy production (-0.2%) and production for durable consumer goods (-0.3%).

This article was written by Justin Low at www.forexlive.com.

The post Ex-Dividend 16/4/2025 first appeared on IC Markets | Official Blog.

• Prior -87.6

This article was written by Justin Low at www.forexlive.com.

Yesterday, Federal Reserve Board Governor Christopher Waller delivered a speech on the economic
outlook at the Certified Financial Analysts Society of St.Louis. Waller has been a key Fed governor because he’s been a “leading indicator” for changes and signals in Fed’s policy. He was the first to talk about QT back in 2021 and the first to signal rate cuts back in 2023.

He’s been right more often than not and the markets have always listened to his comments and reacted accordingly. We saw a reaction to one of his comments yesterday as well. The key line was that in case of a recession, Waller would favour cutting the policy rate sooner and to a greater extent than previously thought.

In his speech, he summarised the current economic outlook and provided two possible scenarios under which he would react in different ways. Long story short, he said that the economy was doing great before April 2 despite some weakening in consumer and business surveys due to uncertainty around tariffs.

Growth was solid even if it slowed a bit, the economy was at full employment and disinflation was back on track after a couple of disappointing months. Then came April 2 and everything changed. As of December 2024, the effective average trade-weighted tariffs for all imports into the United States was under 3%. Earlier in the year, the targeted tariffs brought that level to 10%. But the April 2 tariffs increased the level to 25% or more. A level that the US has not experienced for at least a century.

Scenario #1 – “Large tariffs” (25% on average or more)

Under this scenario, Waller expects inflation to peak around 4-5% and growth to slow down meaningfully. If market-based inflation expectations remain anchored, the weaker demand will put downward pressure on inflation eventually. The unemployment rate could rise to 5% by next year. Given that he expects the effect on inflation to be temporary, he would favour cutting rates sooner and to a greater extent than previously thought. Those would be “bad news” cuts.

Scenario #2 – “Smaller tariffs” (10% on average)

Under this scenario, Waller expects the effects on the economy to be much smaller. Inflation would likely peak around 3% and inflation expectations would remain anchored. He also expects that households and businesses would continue to spend and hire during the trade negotiations that lead to substantially reduced tariffs and possibly remove barriers to US exporters over time. With the threat of a sharp slowdown or recession diminished, the pressure to reduce rates would also diminish. In such a scenario, the Fed will likely cut in the latter half of this year and those would be “good news” cuts.

To sum up

The scenario #1 is bad news and would see the Fed cutting rates to combat a possible recession, while scenario #2 would be good news and would see the Fed still cutting rates on inflation progress but less aggressively than scenario #1.

The problem with the first scenario is that it’s based on the thinking that inflation expectations would remain anchored. I think we are in a different context and the risks for stagflation would rise meaningfully. Hope he’s right and hope Trump would go for scenario #2.

Potential trades

On scenario #1, I would expect the stock market to do great as collectively lower trade barriers would be positive for global growth and the ease in recessionary/high tariffs fears would boost the risk sentiment. Commodities should also do nicely. On a more short-term basis, I would expect the USD to rally and gold to selloff as rate cuts get priced out and stagflationary fears dissipate. Bonds will likely bottom and start a slow upward trend.

On scenario #2, I would expect gold to skyrocket much like we saw in the late 70s on risks of stagflation given the Fed’s preference to cut aggressively despite rising inflation due to a supply shock. The stock market could see a short-term relief rally followed by another selloff. Commodities should be supported amid the Fed easing. Long term bonds will likely remain under pressure.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

It is said that China has ordered its airlines to stop any further delivers of Boeing jets as trade tensions continue with the US for the time being. It doesn’t just stop there though. Beijing has also called for Chinese carriers to also halt any purchases of aircraft-related equipment and parts from US firms as well. More to come..

This article was written by Justin Low at www.forexlive.com.

• 2025 world oil demand growth forecast cut to 730k bpd (previously 1.03 mil bpd)
• 2026 world oil demand growth forecast seen at 690k bpd

At the same time, the agency is also seeing weaker supply with the forecast for the year being at 1.2 mil bpd (down by 260k bpd) due to a decrease in US and Venezuelan output. From yesterday: OPEC lows its demand growth forecast this year

This article was written by Justin Low at www.forexlive.com.

• Eurostoxx +0.3%
• Germany DAX +0.9%
• France CAC -0.3%
• UK FTSE +0.4%
• Spain IBEX +0.6%
• Italy FTSE MIB +0.6%

The French benchmark index is the laggard as luxury stocks are down, following LVHM’s poor Q1 earnings after the close yesterday. The threat of further trade conflict globally isn’t going to help with the outlook on that. As for the broader market mood, it is holding up with S&P 500 futures now up 0.2% on the day.

This article was written by Justin Low at www.forexlive.com.

• We will trade with more friends and become a stronger magnet for investment
• Facing external uncertainty, will stay committed to joining hands rather than throwing punches

While the figure of speech seems to be less feisty, the understanding is that China won’t buckle and try to bolster trade cooperation with other countries than the US instead. There’s still no clear indication that either side is wanting to come to the negotiating table.

This article was written by Justin Low at www.forexlive.com.

• We will trade with more friends and become a stronger magnet for investment
• Facing external uncertainty, will stay committed to joining hands rather than throwing punches

While the figure of speech seems to be less feisty, the understanding is that China won’t buckle and try to bolster trade cooperation with other countries than the US instead. There’s still no clear indication that either side is wanting to come to the negotiating table.

This article was written by Justin Low at www.forexlive.com.

• Prior +0.8%
• HICP +0.9% vs +0.9% y/y prelim
• Prior +0.9%

Core annual inflation is also seen steady at 1.3%, the same as in February. So, this is one spot that the ECB can take heart in. And at the balance, France is not going to take as big of a hit from US tariffs; all else being equal.

This article was written by Justin Low at www.forexlive.com.

Global Markets:

•  Asian Stock Markets : Nikkei up 0.93%, Shanghai Composite down 0.18%, Hang Seng up 0.24% ASX up 0.21%
• Commodities : Gold at $3247.35 (0.09%), Silver at $32.47 (0.58%), Brent Oil at $65.35 (0.45%), WTI Oil at $61.86 (0.34%)
• Rates : US 10-year yield at 4.346, UK 10-year yield at 4.6635, Germany 10-year yield at 2.5210

News & Data:

• (CAD) Wholesale Sales m/m  0.3%  to 0.4%  expected

Markets Update:

Asia-Pacific markets mostly rose on Tuesday, following gains in U.S. markets driven by a tech rally. Japan’s Nikkei 225 climbed 1.08%, while the broader Topix index advanced 1.29%. In South Korea, the Kospi gained 0.93%, and the Kosdaq added 0.29%. Hong Kong’s Hang Seng Index edged up 0.16% amid volatile trading, while China’s CSI 300 remained flat. Australia’s S&P/ASX 200 rose 0.41%.

India’s markets saw strong early gains, with the Nifty 50 jumping 2.10% and the BSE Sensex rising 2.26%. Investors are awaiting India’s March inflation data, with economists expecting the consumer price index to come in at 3.60%, slightly down from 3.61% in February. The wholesale price index is projected to rise to 2.5%, up from 2.38%.

Meanwhile, U.S. futures dipped slightly as markets braced for first-quarter earnings reports and evaluated President Trump’s new tariff plans. The U.S. Commerce Department announced investigations into the impact of semiconductor and pharmaceutical imports on national security.

Despite some uncertainty, U.S. markets closed higher overnight. The Dow Jones Industrial Average rose by 312.08 points (0.78%) to 40,524.79. The Nasdaq Composite gained 0.64% to 16,831.48, and the S&P 500 advanced 0.79% to close at 5,405.97. The rally was largely attributed to a surge in tech stocks, boosted by a surprise tariff exemption announced by Trump.

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The post Tuesday 15th April 2025: Asia-Pacific Stocks Rise on Tech Rally Boost first appeared on IC Markets | Official Blog.