China tariffs precede weekend meet in Switzerland

EU mid-market update: Risk on flows see Bitcoin hold >$100K as positive comments around UK-US deal and China tariffs precede weekend meet in Switzerland.

Notes/observations

- European markets open higher, led by Denmark; Asia also gains, with Nikkei +1.4%, breaking 37K on strong US equity lead.

- Trade front sees US-UK trade deal lifting sentiment, though UK press critical of its limited scope and WTO alignment (sectoral wins for UK autos and steel); Optimism growing over US-China trade talks, with US considering tariff cuts to 50–60% from current 145%, Trump signals openness ahead of Switzerland meeting. Trade hopes acting as rising tide, lifting all risk appetite. Bitcoin hit 3-month high ~$104K.

- China trade exports rose +8% in April; US surplus shrinks to $20.5B on -21% exports to US, rerouting boosts exports to ASEAN (+20.8%) and EU (+8.3%). Japan exports slow. China eyes shift to completed-home sales to curb real estate crisis.

- Bond yields rise globally on better risk sentiment and cautious central banks; UK gilts and Eurozone yields up 7–8bps.

- Danske analysts see US dollar strength as short-term, with longer-term outlook weakening.

- Asia closed mixed with Nikkei225 outperforming +1.5%. EU indices +0.1-0.7%. US futures -0.1% to +0.2%. Gold +0.6%, DXY -0.3%; Commodity: Brent +1.3%, WTI +1.4%; Crypto: BTC +2.9%, ETH +21.5%.

Asia

- China Apr Trade Balance: $96.2B v $93.9Be; Exports Y/Y: 8.1% v 2.0%e; Imports Y/Y: -0.2% v -6.0%e.

- Japan Mar Household Spending Y/Y: 2.1% v 0.2%e.

- Japan Mar Labor Cash Earnings Y/Y: 2.1% v 2.5%e; Real Cash Earnings Y/Y: -2.1% v -1.6%e.

- South Korea Mar Current Account Balance: $9.2B v $7.2B prior.

- Japan Economic Revitalization Min Akazawa stated that was still trying to reach trade agreement with the US; Wanted to reach Summit agreement with US "as soon as we could".

- Japan MOF noted that Japan exports slowed during first 20 days of April.

- Japan Fin Min Kato reiterated government was not thinking about new economic measures, not appropriate to cut the sales tax. Reiterated not thinking of selling US Treasuries for negotiation purposes.

- 40-year JGB yield rises to record 3.35% - highest since the bond was launched in 2007.

Americas

- Pres Trump said to ask Congress to raise taxes on wealthy who earn $2.5M+ in a 'big, beautiful bill'.

- Trump admin reportedly considering plan to cut China tariffs to as low as 50% as early as next week; Also contemplating reducing tariffs on other South Asian countries to 25%.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.38% at 537.66, FTSE +0.44% at 8,569.43, DAX +0.42% at 23,446.63, CAC-40 +0.45% at 7,728.78, IBEX-35 +0.36% at 13,525.62, FTSE MIB +0.63% at 39,220.00, SMI +0.15% at 12,087.20, S&P 500 Futures +0.03%].

Market focal points/key themes: European indices opened higher across the board and remained upbeat through the early part of the session; markets seen supported by news of potential easing of tariffs; better performing sectors include energy and materials; among lagging sectors are financials and telecom; insurance subsector weighed down following Zurich Insurance results; LondonMetric to acquire Urban Logistics; Georg Fischer acquires VAG-group from Aurelius; earnings expected in the upcoming Americas session include Piaggio, EchoStar and Enbridge.

Equities

- Consumer discretionary: IAG [IAG.UK] +2.5% (Q1 results, large Airbus & Boeing order), Norwegian Air [NAS.NO] +1.0% (analyst upgrade).

- Financials: Commerzbank [CBK.DE] +1.5% (Q1 beats estimates, expects buyback in Q3) - Healthcare: Bavarian Nordic [BAVA.DK] +11.0% (Q1 results) - Industrials: Krones [KRN.DE] +1.0% (Q1 results).

- Technology: ASML Holding [ASML.NL] +0.5% (TSMC monthly sales).

Speakers

- ECB’s Rehn (Finland) noted that a rate cut would be the right move in Jun if forecasts were correct. Growth outlook weakening. Disinflation on track. Recent data had shown signs of recovery.

- ECB's Simkus (Lithuania) noted that geopolitics since the start of 2025 had been bad news for economy; no central scenario on rates but a Jun rate cut is needed. Saw downward pressure on inflation but its outlook depended on EU retaliation on US tariffs. A stronger Euro would help inflation. Jun Staff Projections could be a tad worse than ones provided in March.

- BOE Gov Bailey stated that MPD had a diversity of views. MPC would now use a baseline forecast proposed by staff, supplemented with alternative scenarios that don’t imply a skew in risks but help explain policy choices and individual votes.

- Poland Central Bank (NBP) Member Wnorowski noted that could again cut rates in July at earliest; Next rate cut should not be big.

- German Chancellor Merz stated it the country stood ready to raise sanction pressure on Russia as it needed to accept a longer ceasefire on Ukraine.

- Thailand Central Bank (BOT) Gov Sethaput noted that the current potential GDP growth was below 3.0%; ready to introduce additional measures needed to support economy. Had very limited monetary policy space after recent cuts and needed to be cautious on rate cuts in the future. Prepared to cut rates if risks increased. Ready to introduce additional measures needed to support economy which will be targeted, measured.

Currencies/fixed income

- USD eased a bit during the EU session. Focus remained on the trade front as US-Chinese officials meet this weekend in Switzerland. Markets initially had cautious optimism but still believe that negotiations could be long and drawn-out.

- EUR/USD drifted higher to test above the 1.1250 level in the session. Upward momentum waned after ECB members continued to hint at another rate cut in Jun.

- USD/JPY moved a big figure from the Asian session high to probe the lower end of 145 area.

- 10-year German Bund yield at 2.58% and 10-year Gilt yield at 4.60%. 10-year Treasury yield at 4.38%.

Economic data

- (SE) Sweden Apr Maklarstatistik Housing Prices: No est v 1.8% prior.

- (NL) Netherlands Mar Manufacturing Production M/M: -0.6% v +0.8% prior; Y/Y: 1.2% v 0.4% prior; Industrial Sales Y/Y: 4.0% v 1.5% prior.

- (FI) Finland Mar Industrial Production M/M: +3.6% v -1.1% prior; Y/Y: +7.8% v -2.7% prior.

- (SE) Sweden Mar Private Sector Production M/M: -0.5% v -0.3% prior; Y/Y: -0.2% v +1.0% prior.

- (SE) Sweden Mar Industrial Orders M/M: 5.2% v -6.5% prior; Y/Y: 10.2% v 2.4% prior.

- (SE) Sweden Mar Industry Production Value Y/Y: -3.5% v -0.7% prior; Service Production Value Y/Y: 0.7% v 2.5% prior.

- (SE) Sweden Mar Household Consumption M/M: -0.4% v +1.0% prior; Y/Y: 1.8% v 2.0% prior.

- (NO) Norway Apr CPI M/M: 0.7% v 0.6%e; Y/Y:2.5% v 2.5%e.

- (NO) Norway Apr CPI Underlying M/M: 0.5% v 0.6%e; Y/Y: 3.0% v 3.2%e.

- (NO) Norway Apr PPI (including oil) M/M: -5.4% v -7.1% prior; Y/Y: 2.1% v 11.5% prior.

- (NO) Norway Q1 Average Monthly Earnings Y/Y: 5.2% v 5.2% prior.

- (DE) Denmark Mar Current Account (DKK): 33.4B v 29.9B prior.

- (HU) Hungary Apr CPI M/M: 0.2% v 0.1%e; Y/Y: 4.2% v 4.0%e.

- (CH) Swiss Apr SECO Consumer Confidence: -42.4 v -33.0e.

- (AT) Austria Mar Industrial Production M/M: +0.9% v -1.7% prior; Y/Y: 1.4% v 0.6% prior.

- (CZ) Czech Mar Retail Sales (ex-auto) Y/Y: 3.4% v 3.5%e.

- (TR) Turkey Mar Industrial Production M/M: +3.4% v -1.6% prior; Y/Y: +2.5% v -1.9% prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 80.7K v 89.3K tons prior.

- (TH) Thailand May Foreign Reserves w/e May 2nd: $256.1B v $255.8B prior.

- (IT) Italy Mar Industrial Production M/M: 0.1% v 0.5%e; Y/Y: -1.8% v -1.9%e; Industrial Production NSA (unadj) Y/Y: -0.3% v -6.3% prior.

- (GR) Greece Apr CPI Y/Y: 2.0% v 2.4% prior; CPI EU Harmonized Y/Y: 2.6% v 3.1% prior.

- (GR) Greece Mar Industrial Production Y/Y: +1.7% v 6.0% prior.

- (IS) Iceland Q1 Unemployment Rate: 5.0% v 2.9% prior.

Fixed income issuance

- (IN) India sold total INR320B vs. INR320B indicated in 2039 and 2065 bonds.

- (IT) Italy Debt Agency (Tesoro) sold €8.5B vs. €8.5B indicated in 12-month bills; Avg Yield: 1.959% v 2.122% prior; Bid-to-cover: 1.42x v 1.52x.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2043, 2050 and 2058 Bonds.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (PT) Portugal Mar Trade Balance: No est v -€2.0B prior.

- 06:00 (IE) Ireland Mar Industrial Production M/M: No est v 10.9% prior; Y/Y: No est v 34.9% prior.

- 06:00 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £3.0B respectively).

- 06:15 (US) Fed’s Williams.

- 06:45 (US) Fed’s Barr.

- 07:15 (UK) BOE’s Pill (chief economist).

- 07:30 (IS) Iceland to sell RIKB 2027 and 2038 Bonds.

- 07:30 (IN) India announces upcoming bill issuance (held on Wed).

- 07:30 (IN) India Forex Reserve w/e May 2nd: No est v $688.1B prior.

- 08:00 (PL) Poland Central Bank (NBP) Apr Minutes (2 decisions ago).

- 08:00 (UR) Ukraine Apr CPI M/M: 0.6%e v 1.5% prior; Y/Y: 15.2%e v 14.6% prior.

- 08:00 (IS) Iceland Apr Unemployment Rate: No est v 4.2% prior.

- 08:00 (BR) Brazil Apr IBGE Inflation IPCA M/M: 0.4%e v 0.6% prior; Y/Y:5.5%e v 5.5% prior.

- 08:00 (MX) Mexico Apr Consumer Confidence: 46.0e v 46.0 prior.

- 08:00 (MX) Mexico Apr Vehicle Production: No est v 338.7K prior; Vehicle Exports: No est v 297.0K prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (CA) Canada Apr Net Change in Employment: +5.0Ke v -32.6K prior; Unemployment Rate: 6.8%e v 6.7% prior; Full Time Employment Change: No est v -62.0K prior; Part Time Employment Change: No est v +29.5K prior; Participation Rate: 65.3%e v 65.2% prior; Hourly Wage Rate: 3.3%e v 3.5% prior.

- 08:30 (US) Fed’s Kugler.

- 09:15 (EU) ECB’s Simkus.

- 10:00 (US) Fed’s Goolsbee.

- 11:00 (EU) Potential sovereign ratings after European close.

- 11:30 (US) Fed's Williams and Waller on Panel at Hoover.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 19:45 (US) Fed's Musalem, Hammack, Bowman on Panel at Hoover.

- 21:30 (CN) China Apr CPI Y/Y: -0.1%e v -0.1% prior; PPI Y/Y: -2.8%e v -2.5% prior.