New week sees fresh mindset causing volatility to simmer down

EU mid-market update: New week sees fresh mindset causing volatility to simmer down; Sentiment skewed to buyside as Trump announces temporary relief on key electronics.

Notes/observations

- European markets react to U.S. tariff exemption news on key electronics—including semiconductor chips and equipment, smartphones, computers, and consumer tech—sparking broad-based gains. Temporary relief from heavy baseline and China-specific tariffs fuels a short-term rally, though warning bells remain as new duties may soon roll in.

- Overall, volatility dials back from extremes seen last week but CBOE VIX still hovers ~35.

- US dollar remains pressured, dipping below 99.5 on reduced credibility and incoherent policy signals from Washington. Euro and Sterling remain at recent highs.

- Bridgewater Associates' founder Dalio warns of a potential crisis worse than a recession, citing major shifts in both domestic and global orders reminiscent of the 1930s, along with a breakdown in the monetary system. BCA Research's chief strategist Berezin highlights an impending clash between Trump and Fed Chair Powell as a key market theme, expecting the Fed to resist bond purchases to maintain its independence. On April 4th, Trump was pressuring Powell to cut interest rates, calling it a "perfect time" to act. Powell to speak on Wednesday, April 16th.

- More analysts point to Trump’s tariff strategy pretty closely mirrors Nixon’s 1971 economic shock, which included import tariffs and taking the dollar off the gold standard, leading to long-lasting global financial changes. Like Nixon, Trump uses tariffs as a populist tool to protect U.S. manufacturing and shift trade dynamics, potentially triggering economic disruption and inflationary pressures. While the immediate impact may seem limited, history suggests these measures could reshape global finance and trade for years.

- Focus is shifting to upcoming trades discussions, with EU, Japan, South Korea and a couple others lined up to meet US officials in next few days

- OpenAI is reportedly preparing to launch GPT-4.1 - a revamped version of its GPT-4o multimodal model - alongside several new AI models. (potentially "o4 mini high" and "full-o3") as early as this week.

- Asia closed higher with Hang Seng outperforming +2.4%. EU indices +2.2-2.8%. US futures +1.0-1.7%. Gold -0.2%, DXY -0.7%; Commodity: Brent +0.7%, WTI +0.7%; Crypto: BTC -0.1%, ETH +0.8%.

Asia

- China Mar Trade Balance: $102.6B v $73.9Be; Exports Y/Y: 12.4% v +4.2%e; Imports Y/Y: -4.3% v -2.1%e (**Note: Front running of US tariffs again featured prominently in China’s export data).

- Singapore Monetary Authority (MAS) Quarterly Monetary Policy Statement continued its easing. Eases rate of appreciation; maintains width of the band and the level at which it is centered.

- Singapore Q1 Advance GDP Q/Q: -0.8% v -0.4%e; Y/Y: 3.8% v 4.5%e.

- China Foreign Ministry stated that President Xi reiterated during a Vietnam visit that must firmly safeguard the multilateral trading system. Protectionism was not solution, no winner in trade war.

- Japan LDP policy chief Onodera said Japan must strengthen the yen currency, reiterated Japan should not ‘intentionally’ sell its US Treasury holdings.

Europe

- BOE’s Greene noted that higher barriers to trade were likely to weigh on economic growth in countries in Europe. USD had fallen instead of appreciating as you would expect; A stronger dollar would normally push up inflation in other countries.

- S&P raised Italy sovereign rating one notch to BBB+ from BBB; Outlook Stable.

Americas

- President Trump posted that nobody, least of all China, would be “off the hook” on tariff. Would announce tariff rate for semiconductors [chips] 'over the next week' and that chip tariffs to be in place 'in the not distant future’. Would be making a decision on Iran shortly.

- US Commerce Sec Lutnick confirmed exempted electronic products will face separate tariffs along with semiconductors within the next 2 months.

Energy:- Iran Foreign Min Araghchi stated that the next round of talks will be held in Oman on April 19th, adding that Saturday’s meeting “got very close” to reaching a framework for negotiations.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +2.21% at 497.58, FTSE +2.04% at 8,126.26, DAX +2.50% at 20,876.99, CAC-40 +2.23% at 7,263.09, IBEX-35 +1.87% at 12,534.00, FTSE MIB +2.44% at 34,858.00, SMI +1.84% at 11,439.30, S&P 500 Futures +1.44%].

Market focal points/key themes: European indices opened higher across the board and advanced through the early part of the session; all sectors start the day in the green; Isreal to close early for holiday; among sectors leading the way higher are financials and technology; lagging sectors include utilities and telecom; tech sector supported following reprieve on tariffs aimed at China; John Wood Group receives takeover proposal from Sidara; AXA and BNP Paribas Cardif reach agreement on AXA Investment Mangers; Ageas to acquire esure from Bain; earnings expected in the upcoming US session include Goldman Sachs and LVMH.

Equities

- Consumer discretionary: InterContinental Hotels [IHG.UK] +1.5% (analyst upgrade) - Consumer staples: Danone [BN.FR] +0.5% (CItigroup cuts to neutral) - Energy: Pantheon Resources [PANR.UK] -42.0% (flow testing update), Tullow Oil [TLW.UK] +1.5% (Canaccord cuts to hold) - Financials: Ashmore [ASHM.UK] -6.5% (trading update)

- Industrials: John Wood Group [WG.UK] +14.0% (received a holistic non-binding conditional proposal from Sidara at 35p/shr, $450M capital injection, and debt amendments)

- Technology: Infineon [IFX.DE] +3.5%, ASML [ASML.NL] +3.0% (Trump to provide update on semiconductor tariffs on Monday; He confirmed semiconductors, smartphones, computers, and other electronics are temporarily exempt for 'month or two' from reciprocal tariffs; Lutnick announced to launch Section 232 semiconductor probe)

- Materials: Vallourec [VK.FR] +5.5% (In exclusive talks to sell Serimax for €79M)

Speakers

- Poland Central Bank (NBP) Janczyk said it might cut rate by 50-100bps by end-2025

- Thailand Commerce Ministry commented that lower inflation was a reflection of policies to reduce cost of living and did not reflect slowdown in economic activity

- South Korea Acting Pres Han stated that US President Trump had directed immediate tariff talks with South Korea, Japan, India

- Iran Spokesperson commented that US sanctions relief was 'extremely important'

Currencies/fixed income

- Quiet EU session but the broad theme of USD unwinding remained intact. Mixed signals from Washington and ongoing trade tensions had sown confusion among market participants. orsDealers cautioned that the lack of clarity on the timing, levels and scope of the new measures had reinforced fears of a prolonged trade war, US announced a temporary tariff exemption on smartphones and other electronic products from China and this exemption had sparked speculation that more tariff reversals could follow.

- EUR/USD hovered around the 1.14 in quiet trade. Focus on the upcoming ECB rate decision on Thurs where another 25bps cut is the current consensus.

- USD/JPY just under the 143 handle.

- 10-year German Bund yield at 2.55% and 10-year Gilt yield at 4.70%. 10-year Treasury yield at 4.47%.

Economic data

- (SE) Sweden Mar SEB Housing-Price Indicator: 36t v 46 prior.

- (NL) Netherlands Feb Trade Balance: €10.9B v €11.4B prior; Exports Y/Y: 2.9% v 4.4% prior; Imports Y/Y: 3.6% v 3.6% prior.

-(FI) Finland Mar CPI M/M: 0.0% v 0.3% prior; Y/Y: 0.5% v 0.5% prior.

- (CH) Swiss Mar Producer & Import Prices M/M: 0.1%e v 0.3% prior; Y/Y: -0.1% v -0.1% prior.

- (TR) Turkey Feb Current Account Balance: -$4.4B v-$4.4Be.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 446.9B v 443.7B prior; Domestic Sight Deposits: 438.4B v 433.4B prior.

Fixed income issuance

- None seen.

Looking ahead

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

- 05:30 (DE) Germany to sell €3.0B in 12-month BuBills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (RO) Romania to sell RON500B in 7.5% 2033 Bonds.

- 06:30 (TR) Turkey to sell Bonds (2 tranches).

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

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

- 08:30 (CA) Canada Feb Wholesale Sales (ex-petroleum) M/M: 0.4%e v 1.2% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.8-7.4B in 3-month, 6-month and 12-month bills.

- 11:00 (US) Mar NY Fed 1-Yr Inflation Expectations: No est v 3.1% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 13:00 (US) Fed’s Waller.

- 16:00 (US) Weekly Crop Progress Report.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 86.8 prior.

- 17:30 (NZ) New Zealand Central Bank (RBNZ) Conway (chief economist).

- 18:00 (US) Fed's Harker.

- 18:45 (NZ) New Zealand Mar Food Prices M/M: No est v -0.5% prior.

- 19:01 (UK) Mar BRC LFL Sales Y/Y: 0.6%e v 0.9% prior.

- 19:40 (US) Fed's Bostic.

- 21:30 (AU) RBA Mar Minutes.

- 23:00 (KR) South Korea Feb M2 Money Supply M/M: No est v 0.5% prior; ‘L’ Money Supply M/M: No est v 0.8% prior.

- 23:00 (ID) Indonesia Mar Consumer Confidence: No est v 126.4 prior.

-23:35 (JP) Japan to sell 20-year JGB Bonds.