From Marc to Market:
Overview: Many participants were focused on next week's US "reciprocal tariffs" when yesterday, it announced a 25% tariff on imported cars, effective April 3. Fully assembled vehicles are the first target, but by May 3, major parts, such as engines, transmissions, powertrain components and electrical systems will be included. The tariffs on Mexico and Canada will be adjusted based on the share of domestic content. A White House official suggested the tariff will raise as much as $100 bln a year, but economists are suspect this is grossly exaggerated. President Trump's aggressive offensive threatened addition action if Europe and Canada coordinated efforts "to do economic harm" to the US. More tariffs are expected to be announced next week. He also insisted the US must own Greenland. He suggested Greenlanders' wishes are secondary and the US needs to convince them to join, but did not specify use of the proverbial carrot or stick.
The market reaction is relatively subdued, and the reaction of US investors may be key. The US dollar is consolidating mostly within yesterdays' ranges. Gold is at its best level for the week above $3035. Equities are also mostly calm, though Taiwanese and South Korean indies fell over 1%. Europe's Stoxx 600 is off about 2/3 of a 1% and US index futures are narrowly mixed. Benchmark 10-year yields rose in the Asia Pacific region but are 1-2 bp softer in Europe. The 10-year UK Gilt is bucking the trend, and the yield is up 5-6 bp. The 10-year US Treasury yield is up 3-4 bp to almost 4.39%, its highest level since February 25. May WTI is consolidating inside yesterday's range. It traded above $70 a barrel yesterday for the first time since early this month, but is holding below it, so far today....
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