Articles

Japan’s government is considering cutting food consumption tax – pros and cons of this!

This article was written by Eamonn Sheridan at www.forexlive.com.

BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

March 2025 53.2

• prior 53.9

Expansion for a third consecutive month

BusinessNZ’s Director, Advocacy Catherine Beard:

• “The sub-index values were mostly in expansion during March.”

BNZ’s Senior Economist Doug Steel

• “the PMI supports the notion that manufacturing GDP has increased in early 2025. The open question is what lies ahead given recent extreme volatility on global markets following rapidly evolving US-driven trade policy changes. Risks to the global and NZ growth outlook are downward”.

Bolding above is mine. This cannot be emphasized enough.

This article was written by Eamonn Sheridan at www.forexlive.com.

US retailer Five Below has asked vendors to turn away products waiting for shipment in China before they set off for the US

Bloomberg with the info

• Shipping giant A.P. Moller-Maersk A/S sent a letter to suppliers on behalf of the discount retail chain saying that the company has elected to suspend its cargo shipments, following the US and China tariff impact. It was unclear from the memo if it went out to all Five Below vendors, or a subset.

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Some earlier posts related:

• “The next chapter of U.S.-China decoupling has begun. The pain will be felt everywhere. “

This article was written by Eamonn Sheridan at www.forexlive.com.

The Wall Street Journal report on “Trump pushing the world’s two biggest economic powers into a battle that will leave neither unscathed and risks tanking the global economy”.

The Journal is gated, though perhaps this article is not? Link here if you can access it:

• The U.S. and China Are Going to Economic War—and Everyone Will Suffer

Some of the points:

• total tariffs imposed on China in Trump’s second term now add up to 145%
• could eventually be walked back
• already, there are signs that a portion of the $582 billion in goods trading between the two countries is grinding to a halt
• U.S. factories are cancelling orders
• some Chinese manufacturers are putting workers on temporary leave
• Calif.-based kitchen-equipment importer … might have to cut most of the company’s nine employees and contractors

This article was written by Eamonn Sheridan at www.forexlive.com.

EU leaders plan to travel to China for a meeting with Chinese President Xi in July

South China Morning Post with the info.

Earlier:

• EU and China have begun negotiations on abolition of EU tariffs on Chinese electric cars

Trade will top the agenda in these talks.

This article was written by Eamonn Sheridan at www.forexlive.com.

ICYMI:

• The European Union and China have begun negotiations on the abolition of EU tariffs on imports of Chinese electric cars
• European Commission has said it is willing to continue negotiating an alternative to tariffs with China

EU seems to favour some sort of minimum price arrangement

This article was written by Eamonn Sheridan at www.forexlive.com.

Bloomberg (gated) convey the info from S&P:

• Large US companies filed bankruptcy at the fastest rate in 15 years through the first three months of 2025
• A total of 188 bankruptcies were filed by large companies through March, the most since 254 such filings were made over the first three months of 2010
• in 2024 139 large corporate bankruptcies were filed over the same three-month time period

This article was written by Eamonn Sheridan at www.forexlive.com.

Politico with the report on Trump shifting the deckchairs. Trade team moves:

• Treasury Secretary Scott Bessent now at the helm
• Peter Navarro relegated to the sidelines
• Howard Lutnick recast into the role of “bad cop”

Politico cite “according to three people close to the White House”. Politico has more, and its ungated.

*

Lutnick’s explanations on trade to media have been false, misleading and not credulous. The market responded to this and the man lacks any credibility now. And as for Navarro, Trump’s main offsider, Elon Musk, described him as a moron earlier this week.

Bessent seems to have been the guy responsible for explaining to Trump, in simple and understandable terms, why the bond market meltdown was a danger to the administration. This triggered Trump’s reversal on tariffs and the bounce in stocks on Wednesday.

This article was written by Eamonn Sheridan at www.forexlive.com.

• US equity close: Bad, but not as bad as it could have been
• Economic calendar in Asia Friday, April 11, 2025, a very light one
• Trump admin is moving toward a possible de-listing of Chinese public shares – report
• Why the bond market continues to buckle: US 30-year yields hit a new high
• Crude oil futures settle at $60.07
• More from Goolsbee: Says he is not hearing much from business contacts about layoffs
• The White House thinks it can re-write the rules of economics. The market thinks otherwise
• US March Federal budget deficit -161.0B vs -236.6B expected
• Trump: We will have great certainty on tariffs in 90 days
• US sells 30-year bonds at 4.813% vs 4.839% WI
• Fed’s Goolsbee: The Fed timetable is not the market timetable
• DXY has worst day since November 2022
• EU set to suspend tariff countermeasures. Euro nears the 2024 high
• US House vote advancing Trump budget passes 216-214
• Fed’s Bowman: Growth is solid but is slowing
• China tariffs are 145%, not 125%
• A 10% floor on tariffs is a problem
• Xi would take a call from Trump if the phone rang – report
• Fed’s Schmid: Takes little solace from theory that tariffs will be one-off price hike
• Fed’s Logan: Important to keep tariff-related price rises from fostering inflation
• White House’s Miran: The cost of tariffs are borne by the countries we’re are tariffing
• BOE’s Breeden: Latest developments have a material impact on economic outlook and risks
• US initial jobless claims 223K vs 223K estimate
• US March core CPI +2.8% vs +3.0% y/y expected
• Canada February building permits +2.9% vs -0.5% expected
• ForexLive European FX news wrap: Dollar struggles as markets digest Trump’s tariffs pause

The US dollar moved sharply to the downside with the dollar index (DXY) down -1.83%. That was its largest one-day decline going back to November 2022.. The US dollar was the weakest versus the Swiss franc at -3.94%. The USDCHF fell to the lowest level since 2011.

The greenback also fell -2.26% versus the EUR and -2.06% versus the JPY. The decline vs the CAD of -0.77% was the smallest decline for the greenback vs a major currency today.

Helping the downside, was lower CPI inflation which saw the core measure come in at 0.1% versus 0.3% estimate. The headline number came in at -0.1% versus 0.1% expected. The year-on-year for the headline was 2.4% versus 2.8% last month, while the core fell to 2.8% from 3.1% last month.

Although inflation came down, the markets are still worried about the impact of tariffs. Although Pres. Trump delayed tariffs for most countries by 90 days, the tariff rate on China imports increased to 145%. With China a major exporter to the US that shuts down any direct exporting to the US (however, there will likely be indirect movement of goods from other countries) until there is a resolution..

After oversized gains yesterday in the US stock markets, the equity market traders rethought the current tariffs and retraced some of the gains from yesterday’s trading today. Yesterday the::

• Nasdaq gained 1857.06 points or 12.16% today.
• S&P soared by 434.13 points or 9.52% .
• Dow industrial average rose 2962.86 points or 7.87% to 40,608.45.
• Small-cap Russell index gained 152.45 points or 8.66% to 1913.16.

Today, the

• NASDAQ index fell -737.66 points or -4.31% at 16387.33
• S&P index fell -189.08 points or -3.46% at 5267.83.
• Dow industrial average index fell -1015.01 points or -2.50% at 39593.66.
• Russell 2000 index fell -81.76 points or -4.27% at 1831.39

Going into the final day of the trading week, the major indices are trading higher:

• Dow industrial average +3.34%
• S&P index, +3.82%
• NASDAQ index 5.13%

Yields today saw the yield curve steepen despite another strong auction in the 30-year sector:

• 2 year 3.845%, -10.5 basis points. For the week, the yield is up 20.3 basis points
• 5 year 4.031%, -6.7 basis points. For the week, the yield is up 33.5 basis points
• 10 year yield 4.399%, +0.3 basis points. For the week the yield is up 40.5 basis points.
• 30 year yield 4.868%, +7.6 basis points. For the week the yield is up 44.7 basis points

There were a number of Fed speakers today,:

• Dallas Fed Pres. Lorie Logan stated that the current stance of Fed policy is appropriately positioned for now. She warned that higher-than-expected tariffs could lead to a troubling combination of rising unemployment and inflation. Logan emphasized the importance of preventing tariff-related price increases from fueling broader inflation pressures. She noted that inflation persistence will depend on how rapidly businesses pass on higher costs and whether long-term inflation expectations stay well anchored. A sustained surge in inflation could risk unmooring those expectations.
• Kansas City Fed President Jeff Schmid expressed concern over the inflationary impact of recent tariff announcements, stating that they have heightened economic uncertainty. He rejected the notion that tariffs would result in only a temporary, one-off price increase, emphasizing that the Fed cannot risk its credibility on inflation. Schmid noted that the tariff news has coincided with falling consumer sentiment and a rise in short-term inflation expectations. He stressed the need to stay focused on inflation control, though his remarks do not account for the latest CPI report or the recent partial pause on tariffs.
• Fed Governor Michelle Bowman noted that while economic growth remains solid, there are signs of slowing. She acknowledged the recent CPI report showing inflation has declined and emphasized the importance of monitoring how evolving policies impact the broader economy. Bowman said the effects of tariffs remain uncertain, both in terms of their overall economic impact and how they may influence specific industries.

Fed’s Goolsbee – never at a loss for words – weighed in on a number of different topics today:

• Interest Rates and Monetary Policy
  Fed’s Goolsbee emphasized that all policy options should remain on the table and reiterated that the Fed’s decision-making timetable is distinct from market expectations. He advocated for a patient, data-driven approach, urging against premature conclusions. Given current uncertainties, he believes now is the time for the Fed to wait and observe, rather than act. Goolsbee also noted that he would not speculate on how the Fed might respond to potential market stress, reinforcing the importance of flexibility.
• Market Conditions and Financial Stability
  Goolsbee addressed broader market dynamics, noting that recent bond market volatility has been global, not just confined to the U.S. He acknowledged that current tariffs are already higher than most previous scenarios, but believes short-run tariffs are unlikely to shift the broader economic trajectory. A strong 10-year Treasury auction helped ease concerns, and long-term Treasuries still appear to be the safest global asset. However, he cautioned that financial conditions indexes can be hard to interpret and should be considered carefully.
• Economic and Inflation Outlook
  Goolsbee described the current state of the U.S. economy as solid, with hard data remaining strong and unemployment hovering near full employment. The economy had been moving toward a “golden path,” though fears of a return to pandemic-era disruptions and stagflation risks still linger. He stressed the increasing importance of timely soft data and warned that a loss of confidence could trigger broader issues. Inflation appears to be trending down, and while short-term inflation expectations are mixed, long-term expectations remain well anchored — a key focus for the Fed. He also emphasized that the full impact of current policy rates may take 12–18 months to materialize.
• Structural and Productivity Trends
  From a structural standpoint, Goolsbee highlighted that the U.S. retains a robust manufacturing base, albeit with a complicated supply chain. Additionally, he noted that recent gains in productivity could be tied to advances in artificial intelligence. He also mentioned that he has not heard widespread concerns from business contacts regarding layoffs, reinforcing his view that the labor market remains resilient.

Finally late in the day,

• Boston Fed President Susan Collins stated that current interest rate policy is appropriately positioned, and for now, holding steady is the best approach. However, she warned that newly imposed tariffs are likely to push inflation higher while simultaneously slowing economic growth. Core inflation could rise “well above” 3% this year, which may delay the timing of any potential rate cuts, though there is still room for cuts later in the year if conditions allow.Collins emphasized that monetary policy faces difficult trade-offs and must remain flexible amid high uncertainty. She highlighted the importance of keeping inflation expectations anchored and acknowledged risks remain skewed toward higher inflation and weaker growth. Tighter financial conditions may also help restrain activity, and although the short-term outlook is clouded, Collins expects inflation pressures to ease over the longer term.

In other markets today:

• Gold is closing at a record level. Use currently trading up $88.51 or 2.87% at $3170.46. The high price today reached $3176.40.
• Crude oil fell sharply. The current price is trading down $-2.26 at $60.06..
• Bitcoin is trading down $2876 and $79,719.

This article was written by Greg Michalowski at www.forexlive.com.

Trump Trade Adviser Peter Navarro flagging deals with those three countries.

He has lost the confidence of Elon Musk.

This article was written by Eamonn Sheridan at www.forexlive.com.

Good morning, afternoon and evening all. Its Friday where I am, what a week! Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

The Financial Times with the report. Its gated but Reuters provided the gist of it. The remarks are from:

• EU could tax big tech if Trump trade talks fail
• EU would seek “completely balanced” agreement with us during Trump’s 90-day pause in applying additional tariffs
• “We are developing retaliatory measures”
• There’s a wide range of countermeasures, in case the negotiations are not satisfactory

This article was written by Eamonn Sheridan at www.forexlive.com.