• US stocks were volatile but ultimately saw historic upside (SPX +9.5%, NDX +12.0%, RUT +8.7%, DJI +7.9%) as US President Trump implemented a 90-day pause on reciprocal tariffs to the 75 countries who approached the US for talks with their tariff rates dropping to the baseline 10% to allow time for negotiations. However, Trump also announced he will be increasing China tariffs even higher to 125% from 104% after China responded to the additional US tariffs, by implementing 84% tariffs, up from 34%. Bonds were incredibly choppy but settled well in the red with chunky selling pressure seen overnight, while the dollar rallied from its lows and money markets are fully pricing in three Fed rate cuts this year vs four priced on Tuesday.
• USD strengthened after US President Trump’s announcement of a 90-day pause to reciprocal tariffs on 75 countries including those in Trump’s view that have both called the US and not retaliated in any way, shape, or form to US tariffs and will receive a substantially lowered reciprocal tariff during this period of 10%, effective immediately, although he announced to increase reciprocal tariffs on China to 125% from 104% after China announced an additional 50% tariff on the US to lift its retaliatory tariffs to a total of 84%. Given that trade was the dominating topic of the day, FOMC Minutes were a non-event and remarks from Fed speakers may be seen as outdated given the tariff policy changes, while the focus ahead will remain on trade, as well as US CPI and a series of Fed speakers on Thursday.
• Looking ahead, highlights include Japanese PPI, Australian MI Inflation Expectations, Chinese CPI & PPI, Supply from Japan, Indian Markets are Closed for Holiday.

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LOOKING AHEAD

• Highlights include Japanese PPI, Australian MI Inflation Expectations, Chinese CPI & PPI, Supply from Japan, Indian Markets are Closed for Holiday.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were volatile but ultimately saw historic upside (SPX +9.5%, NDX +12.0%, RUT +8.7%, DJI +7.9%) as US President Trump implemented a 90-day pause on reciprocal tariffs to the 75 countries who approached the US for talks with their tariff rates dropping to the baseline 10% to allow time for negotiations. However, Trump also announced he will be increasing China tariffs even higher to 125% from 104% after China responded to the additional US tariffs, by implementing 84% tariffs, up from 34%. Bonds were incredibly choppy but settled well in the red with chunky selling pressure seen overnight, while the dollar rallied from its lows and money markets are fully pricing in three Fed rate cuts this year vs four priced on Tuesday.
• SPX +9.52% at 5,457, NDX +12.02% at 19,145, DJI +7.87% at 40,608, RUT +8.66% at 1,913.
• Click here for a detailed summary.

TRADE/TARIFFS

• US President Trump raised the tariff charged to China by the US to 125% (prev. 104%) effectively immediately, but authorised a 90-day pause and lowered reciprocal tariffs to 10% during this period on the 75 countries that have asked for talks.
• US President Trump said he announced a tariff pause because people were getting afraid and jumping out of line. Trump also said that China wants to make a deal and doesn’t know how to go about it, while he added nothing is over yet and a deal could be struck with China. Trump responded a deal could be made with everyone when asked about an EU deal, as well as noted it is working out maybe faster than he thought and said have to be flexible with tariffs. Furthermore, he said the bond market now is beautiful and they will take a look at exempting some US companies.
• US President Trump said he was thinking about pausing tariffs for the past few days and the decision to pause tariffs came together on Wednesday morning, while he added they don’t want to hurt countries that don’t need to be hurt and that sectoral tariffs are still coming. President Trump also said he thinks they will end up making a very good deal with China, as well as stated he is not concerned about escalation with China outside of the trade war and ‘can’t imagine’ a further increase of tariffs on China.
• US Treasury Secretary Bessent said countries who did not retaliate will be rewarded and that China tariffs are being raised due to retaliation. Bessent said they will work on a solution with trading partners and the US is expecting countries to come with their best deal. Furthermore, he said the pause allows time to negotiate and it is not because of the market’s reaction.
• White House said there is no 10% baseline tariff on Canada and an official confirmed there was no change to autos, steel and aluminium tariffs, as well as no change to Canada and Mexico tariffs. Furthermore, a White House official commented that the 90-day ‘pause’ on tariffs does not apply to tariffs on Canada and Mexico, with the 25% tariff on non-USMCA trade with Canada and Mexico to remain in effect, except for the 10% tariff on energy and potash.
• US Commerce Secretary Lutnick said he expects the EU will delay its planned tariff retaliation after today’s announcement.
• White House trade advisor Navarro said every US trade deal is going to be tailor-made and this is unfolding exactly the way it should, while he added tariff talks are going to move “fast and beautifully”.
• USTR Greer said he expects to see a handful of countries open markets to US exports, which will help make it easier to manufacture products in the US.
• China earlier announced additional tariff measures on US goods with tariffs of 84% on US goods from April 10th (34% already announced + 50% additional), while China added 12 US entities to the export control list and 6 US entities to the “unreliable entity” list.
• FT reported that there had been no discussions between China and the US about resolving the trade war, according to sources cited, while the article added unlike other Asian nations China has not reached out to the US to start talks and the US has also not reached out. In relevant news, CNBC’s Yoon said China messaged it hasn’t closed the door on negotiations with US President Trump.
• EU Commission earlier announced it would impose the first countermeasures against the US on April 15th and a retaliation of 10-25% on US imports, while it secured backing from EU countries for the first countermeasures against US tariffs.

FOMC MINUTES

• FOMC Minutes stated all participants viewed it appropriate to keep rates unchanged in light of the uncertainty around the economic outlook and participants remarked uncertainty about the net effect of government policies on the outlook was high, making it appropriate to take a cautious approach. Furthermore, some participants assessed the FOMC was well positioned to wait for more clarity on the outlook and some participants observed the FOMC may face difficult trade-offs if inflation proved more persistent while the outlook for growth and employment weakened.

NOTABLE HEADLINES

• Fed’s Musalem (2025 voter) expects US economic growth this year will be materially below the estimated 2% trend, while he noted the baseline outlook is not for a recession, but slipping confidence, higher prices and a blow to household wealth points to slowing growth. Musalem also stated it is risky to assume the Fed can look through higher prices from tariffs, there is a chance some effects could persist.
• Fed’s Kashkari (2026 Voter) said no monetary policy response, up or down, should be off the table and the hurdle to changing the policy rate has increased due to tariffs, while he added the bar is higher for cutting even if the economy and labour market are weakening.
• Fed’s Barkin (2027 voter) said the trade war is likely to cause fewer jobs and higher prices, but price hikes may not show up until the summer, as companies work through pre-tariff inventories, according to Axios. Barkin also said he is watching consumers closely and it is the biggest part of the economy, while he worries if they are close to a moment where consumers decide to pull back but noted this has not happened so far.
• Fed’s Daly (2027 voter) said we have the time and space to deliberate on the next moves, according to LinkedIn.
• US President Trump’s administration reportedly threatens to scrap consultancy contracts after “insulting” proposals, according to FT. It was separately reported that the Trump administration backed off Nvidia’s (NVDA) H20 chip crackdown after the CEO’s Mar-A-Lago dinner, according to a report cited by CNBC.
• US President Trump posted “BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!”, while he also posted “THIS IS A GREAT TIME TO BUY!!! DJT”.
• US is considering a bailout of farmers as Chinese retaliation threatens exports, according to Bloomberg.
• “Top money managers say it was Japan not China selling last night that upended the bond market and forced Trump’s hand into a pause. And yes Trump took the win as so many countries wanted to do deals”, according to FBN’s Gasparino.

DATA RECAP

• US Wholesale Inventories MM (Feb) 0.3% vs. Exp. 0.3% (Prev. 0.3%)
• US Wholesale Sales MM (Feb) 2.4% (Prev. -1.3%, Rev. -0.9%)

FX

• USD strengthened after US President Trump’s announcement of a 90-day pause to reciprocal tariffs on 75 countries including those in Trump’s view that have both called the US and not retaliated in any way, shape, or form to US tariffs and will receive a substantially lowered reciprocal tariff during this period of 10%, effective immediately, although he announced to increase reciprocal tariffs on China to 125% from 104% after China announced an additional 50% tariff on the US to lift its retaliatory tariffs to a total of 84%. Given that trade was the dominating topic of the day, FOMC Minutes were a non-event and remarks from Fed speakers may be seen as outdated given the tariff policy changes, while the focus ahead will remain on trade, as well as US CPI and a series of Fed speakers on Thursday.
• EUR ultimately returned to flat territory after pulling back from resistance just shy of the 1.1100 territory, while the EU had earlier announced it would impose countermeasures against the US although Commerce Secretary Lutnick later commented that he expects the EU will delay its planned tariff retaliation after Trump’s 90-day pause announcement.
• GBP strengthened but with price action choppy in which GBP/USD traded on both sides of the 1.2800 level.
• JPY weakened as risk appetite was reignited by Trump’s 90-day reciprocal tariff pause which propelled USD/JPY briefly above 148.00.

FIXED INCOME

• T-notes settled considerably lower as volatility persisted with President Trump announcing a 90-day reciprocal tariff pause on dozens of countries but upped tariffs on China, while there was a very strong 10yr auction but did little to inspire a turnaround, while money markets reverted to pricing in just three Fed rate cuts this year.

COMMODITIES

• Oil prices rallied amid a resurgence of risk appetite after President Trump announced a 90-day pause to reciprocal tariffs on 75 countries.
• US EIA Weekly Crude Stocks w/e 2.553M vs. Exp. 1.421M (Prev. 6.165M).
• US Energy Secretary Wright said will discuss on a visit to the UAE supporting announced investments into the US, enhancing global energy security.
• Canadian PM Carney said if he wins the April 28th election, Canada will use domestic energy to displace imported energy, including energy imported from the US, while his government would set up an office to issue a decision on whether to go ahead with major mining and energy projects after a single review.

GEOPOLITICAL

MIDDLE EAST

• IDF announced a large-scale operation in Nablus in the West Bank, according to Sky News Arabia.
• Israeli official confirmed that Turkish and Israeli officers are discussing the establishment of a deconfliction mechanism between the two militaries in Syria.
• Yemeni Houthi spokesperson said two military operations were carried out including on military targets of Israel in Jaffa and the second targeted a number of war pieces, including the American aircraft carrier Truman with a number of drones.
• US Treasury is sanctioning enablers to the Iranian nuclear programme.

RUSSIA-UKRAINE

• More than 150 Chinese citizens have reportedly joined the Russian military to fight against Ukraine, according to Ukrainian intelligence reports viewed by WSJ.

ASIA-PAC

NOTABLE HEADLINES

• China’s top leaders will hold a meeting as soon as April 9th to discuss measures to boost the economy after US trade tariffs, according to Reuters citing sources with leaders to discuss measures to stabilise capital markets and some could be implemented in coming weeks.
• China released a White Paper on US trade and economic relations and is to take countermeasures to safeguard rights and interests, while it stated it firmly opposes unliteral/bullying restrictive measures.
• Chinese monetary and fiscal stimulus is unlikely to fully protect the Chinese economy from the severe downturn in global demand caused by tariffs, according to Reuters sources.
• China Commerce Ministry said any TikTok US business arrangement must comply with Chinese laws. In relevant news, White House officials are reportedly conceding that the potential TikTok US deal is off the table for the foreseeable future, and maybe forever, as the trade war focuses solely on China, according to Fox’s Gasparino.
• US President Trump is expected to sign an executive order as early as Wednesday aimed at reinvigorating US shipbuilding and reducing China’s grip on the global shipping industry, according to Reuters journalist on X citing sources.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves said the Trump tariff war is not enough to override UK fiscal rules.
• ECB’s Holzmann (Hawk) said he does not see reason for a rate cut for now and waiting is the best strategy when uncertainty is this high, while he added considering an outsized 50bps cut is “ludicrous”.
• ECB’s Rehn said downside risks have materialised since the March meeting and the case for continuing rate cuts at the April meeting is supported by downside risks materialising.
• ECB’s Villeroy said US politics is marked by huge unpredictability.