From Marc to Market:
Overview: The dollar rallied in the second half of last week even as interest rates fell amid a new growth scare. The 25% tariffs on Canada (10% on energy) and Mexico that were postponed a month ago, could be implemented as early as tomorrow. The only tariffs that have been imposed so far were 10% on Chinese imports, and another 10% threatened tomorrow, and apparently in April, too. The economic disruption that the tariffs and tariff threats seem to be creating has become a more central concern. The dollar is softer against all the G10 currencies. European currencies are leading the move, amid higher rates and stronger stocks. Emerging market currencies are mostly firmer, led by central European currencies.
Asia Pacific equities were mixed today. Japan, Hong Kong, and Australia rallied among the large markets. China, Taiwan, and India were lower, while South Korea's was on holiday. Europe's Stoxx 600 has rallied for the past ten weeks. It is up 10.25% year-to-date and is up about 0.5% today. US index futures are building on the strong pre-weekend recovery. Benchmark bond yield is jumping 4-7 bp in Europe and the 10-year US Treasury yield is up almost five basis points to 4.25%. Gold fell almost 2.7% last week, its first weekly decline this year. It is about 0.5% higher today near $2872. April WTI set a three-day high earlier near $70.60 but has reversed low to approach last Friday's low around $69.15.
USD: The Dollar Index is snapping a three-day 1.5% advance. The renewed focus on tariffs, which could be implemented this week on Canada and Mexico and another 10% hike on the levy on Chinese goods helped fuel the greenback's recovery in the face of falling yields in the second half of last week....
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