Waiting on Trump reciprocal tariff announcement as trade partners look unlikely to back down

EU Mid-Market Update: Waiting on Trump reciprocal tariff announcement as trade partners look unlikely to back down; Elections in Wisconsin and Florida revealed subtle shifts in US political landscape.

Notes/observations

- Europe expresses some cautious tones as major bourses turn lower ahead of Trump’s announcement on ‘reciprocal tariffs’, expected at US cash close 16:00 ET (20:00 GMT). Likely options include a 20% universal tariff, a tiered system with three rate levels, or country-specific rates mirroring foreign duties. Levies are expected to apply with immediate effect. Reminder that a 25% auto tariff starts being collected on Apr 3rd, and a Venezuelan oil-related tariff begins today. For global assets outside of Europe, market participants sit on sidelines, waiting for specific details to dictate direction and sentiment.

- Likely to see immediate response from major trade partners to US, such as EU, China, UK and plenty of jawboning from smaller countries.

- Yesterday’s elections in Wisconsin and Florida revealed subtle shifts in the U.S. political landscape, with Republicans holding two Florida congressional seats but with slimmer margins than in 2024, while Democrats secured a crucial Wisconsin Supreme Court seat to maintain their 4-3 majority.

- Coincidentally, news flow is muted, with insignificant European economic data and only US ADP jobs report giving something to chew on at 08:15 ET.

- Asia closed mixed with KOSPI underperforming -0.6%. EU indices -0.9% to +0.1%. US futures -0.2% to -0.4%. Gold +0.2%, DXY -0.1%; Commodity: Brent -0.1%, WTI -0.1%; Crypto: BTC +1.1%, ETH 0.0%.

Asia

- South Korea Mar CPI M/M: 0.2% v 0.1%e; Y/Y: 2.1% v 1.9%e.

- Australia Feb Building Approvals M/M: —0.3% v 1.3%e; Private Sector Houses M/M: 1.0% v 1.4% prior.

- South Korea acting Pres Han appeals for calm ahead of Apr 4th (Fri) Constitutional Court decision on Pres Yoon's impeachment;

- Reserve Bank of Australia (RBA) Asst Gov Kent (Financial Markets): To increase the price of all new OMO repos by 5bps to 10bps over the Cash Rate target - speech at The RBA’s Monetary Policy Implementation System.

Europe

- German Banking Assoc: Cuts 2025 GDP growth forecast from 0.7% to 0.2%.

-Italy Business Lobby Confindustria: Cuts 2025 GDP growth forecast from 0.9% to 0 6%; In a worst case scenario, with permanent 25% US tariffs on all imports, rising to 60% for China, and retaliatory measures against U.S. exports, Italy's GDP growth would fall to around 0.2% in 2025 and 0.3% in 2026.

-Greece PM Mitsotakis: Plan to spend additional €25B on defense over next 12-years.

Americas

- Trump said to be weighing three primary approaches: a blanket 20% tariff on all imports, a tiered system with three different rate levels, and a country-by-country rate model—with the latter being the favored option among officials. One source told CNBC that the blanket tariff was “less likely than the other two,” and the ultimate goal is country-specific tariffs.

-Reportedly Trump seriously considering Iran's offer of indirect nuclear talks, while at the same time White House significantly boosting U.S. forces in the Middle East in case Trump opts for military strikes - Axios.

- Fed's Goolsbee (voter) noted that if could get past this period of uncertainty, the underlying strength of economy i\was still there.

- In special election results US Republicans won both US House seats in Florida that were up for grabs to replace Mike Walz and Matt Gaetz joining the Trump Admin. The results extend the GOP majority in the House to 220-213 (from 218).

- Canada to avoid counter-tariffs that risk Canadian jobs and price increases.

Energy

- Weekly API Crude Oil Inventories: +6.0M v -4.6M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.67% at 536.04, FTSE -0.56% at 8,586.79, DAX -0.86% at 22,340.00, CAC-40 -0.37% at 7,846.95, IBEX-35 +0.09% at 13,332.00, FTSE MIB -0.69% at 38,292.00, SMI -0.67% at 12,604.30, S&P 500 Futures -0.27%].

Market Focal Points/Key Themes: European indices opened lower across the board and remained under pressure through the early part of the session; markets taking a cautious approach ahead of “Liberation Day” tariff announcement scheduled for the American afternoon; better performing sectors include consumer discretionary and communication services; while health care and industrials among the sectors leading ot he downside; Bakkavor receives agreement in principle for takeover from Greencore; Svitzer receives takeover offer from APMH; reportedly Brookfield restarting takeover talks with Grifols; reportedly Belgian state considering sale of its stake in BNP Paribas; focus on US durable goods orders coming out later in the day; earnings expected in the upcoming US session include Blackberry.

Equities

- Financials: Banco BPM [BAMI.IT] -2.0% (Unicredit assessing alternatives to a sales agreement with Credit Agricole SA’s funds unit amid signs that Credit Agricole doesn’t support the takeover bid for Banco BPM), BNP Paribas [BNP.FR] -2.5% (Kepler cuts to reduce).

- Healthcare: Grifols [GRF.ES] +12.5% (Brookfield said to restart talks with the co. regarding a possible offer - Spanish Press), AlzeCure [ALZCUR.SE] +6.0% (article has been published in Nature suggesting the use of NeuroRestore ACD856 in the treatment of obesity).

- Industrials: Svitzer Group [SVITZR.DK] +30.5% (receives DKK9.0B offer from APMH at DKK 285/shr (~31.7% premium); trading update), Stellantis [STLA.NL] -1.0% (US to start collection auto tariffs from tomorrow), Technotrans [TTR1.DE] +6.0% (final FY24 results and FY25 guidance).

Speakers

- ECB Chief Lagarde commented that had a mission to procure price stability to the economy. Inflation was close to target but still had some work to do.

- ECB's Rehn (Finland) stated that ECB to maintain complete freedom of action. Reiterated not pre-committing to any particular rate path.

- Greece PM Mitsotakis stated that gov t planned to spend additional €25B on defense over next 12-years.

- Italy Business Lobby Confindustria cut it Cuts 2025 GDP growth forecast from 0.9% to 0 6%.

Currencies/fixed income

- FX markets were at a standstill ahead of the Trump announcement of retaliatory tariff measures. Dealers pondered the ramifications should the announcement provide insufficient clarity on trade policies. Particularly questions regarding about the scope, scale and targets of the measures. Also markets to analyze responses from countries that are hit with levies.

- EUR/USD staying below the 1.08 level hampered also by a dearth of economic releases.

- GBP/USD at 1.2910.

- USD/JPY at 149.70.

- 10-year German Bund yield at 2.67% and 10-year Gilt yield at 4.64%. 10-year Treasury yield at 4.17%.

- Bond yields eased ahead of tariff announcement while gold continued to probe record highs.

Economic data

- (FR) France Feb YTD Budget Balance:-€40.3B v -€17.3B prior.

- (TR) Turkey Mar Manufacturing PMI: 47.3 v 48.3 prior.

- (ES) Spain Mar Net Unemployment Change: -13.3K v -6.0K prior; Net Employment Change: +23.1K v +58.7K prior.

- (BR) Brazil Mar FIPE CPI (Sao Paulo) M/M: 0.6%e v 0.5% prior.

Fixed income issuance

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK2.845B in 2027 and 2035 DGB bonds.

- (UK) DMO sold £1.6B in 1.125% Sept 2035 inflation-linked bonds (UKTi); Real Yield: 1.268% v 1.115% prior; bid-to-cover: 3.36x v 3.52x prior.

- (SE) Sweden sold total SEK20.0B vs. SEK20.0B indicated in 3-month and 6-month Bills.

- (GR) Greece Debt Agency (PDMA) sold €600M vs. €500M indicated in 3-month Bills; Avg Yield: 2.03% v 2.37% prior; Bid to cover: 1.91x v 2.45x prior.

Looking ahead

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 5.75%.

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

- 05:30 (DE) Germany to sell €4.5B in 2.5% Feb 2035 Bunds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (IE) Ireland Mar Unemployment Rate: No est v 3.9% prior.

- 06:00 (EU) EU Commission to sell combined €4.5B in 3-month, 6-month and 12-month Bills.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 06:30 (DE) ECB’s Schnabel (Germany).

- 07:00 (US) MBA Mortgage Applications w/e Mar 28th: No est v -2.0% prior.

- 07:00 (UK) Weekly PM Question time in House.

- 07:01 (NZ) New Zealand Mar CoreLogic Home Value M/M: No est v 0.3% prior.

- 07:30 (BR) Brazil Feb Total Outstanding Loans (BRL): No est v 6.462T prior; M/M: No est v 0.0% prior; Personal Loan Default Rate: No est v 5.5% prior.

- 08:00 (BR) Brazil Feb Industrial Production M/M: 0.3%e v 0.0% prior; Y/Y: 2.1%e v 1.4% prior.

- 08:00 (MX) Mexico Mar Vehicle Domestic Sales: No est v 117.6K prior.

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

- 08:15 (US) Mar ADP Employment Change: +120Ke v +77K prior.

- 09:00 (SG) Singapore Mar Purchasing Managers Index: No est v 50.7 prior; Electronics Sector Index: No est v 51.0 prior.

- 09:00 (AT) ECB's Holzmann (Austria).

- Poland Central Bank (NBP) Interest Rate Decision.

- 09:30 (UK) Chancellor of the Exchequer (Fin Min) Reeves in Parliament on 2025 budget.

- 10:00 (US) Feb Factory Orders: 0.5%e v 1.7% prior; Factory Orders (ex-transportation): 0.4%e v 0.2% prior.

- 10:00 (US) Feb Final Durable Goods Orders: 0.9%e v 0.9% prelim; Durables (ex-transportation): 0.7%e v 0.7% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.8% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v -0.3% prelim.

- 10:05 (IE) ECB's Lane (Ireland, chief economist).

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:00 (DK) Denmark Mar Foreign Reserves (DKK): No est v 657.0B prior.

- 11:00 (CO) Colombia Feb Exports: $3.9Be v $3.8B prior.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (RU) Russia Feb Real Retail Sales Y/Y: 3.8%e v 5.4% prior.

- 12:00 (RU) Russia Feb Unemployment Rate: 2.4%e v 2.4% prior; Jan Real Wages Y/Y: 6.4%e v 11.3% prior.

- 15:45 (EU) ECB chief Lagarde.

- 16:00 (US) President Trump announcement on reciprocal tariffs.

- 16:30 (US) Fed’s Kugler.

- 17:00 (KR) South Korea Mar Foreign Reserves: No est v $409.2B prior.

- 18:00 (AU) Australia Mar Final PMI Services: No est v 51.2 prelim; PMI Composite: No est v 51.3 prelim.

- 20:00 (NZ) New Zealand Mar ANZ Commodity Price M/M: No est v 3.0% prior.

- 20:01 (IE) Ireland Mar PMI Services: No est v 53.2 prior; PMI Composite: No est v 53.4 prior.

- 20:30 (JP) Japan Mar Final PMI Services: No est v 49.5 prelim; PMI Composite: No est v 48.5 prelim.

- 20:30 (HK) Hong Kong Mar PMI (whole economy): No est v 49.0 prior.

- 20:30 (SG) Singapore Mar PMI (whole economy): No est v 51.0 prior.

- 20:30 (AU) Australia Central Bank (RBA) Financial Stability Review.

- 20:30 (AU) Australia Feb Job Vacancies Q/Q: No est v 4.2% prior.

- 20:30 (AU) Australia Feb Trade Balance (A$): 4.5Be v 5.6B prior; Exports M/M: No est v 1.3% prior; Imports M/M: No est v -0.3% prior.

- 21:45 (CN) China Mar Caixin PMI Services: 51.5e v 51.4 prior; PMI Composite: No est v 51.5 prior.

- 23:35 (JP) Japan to sell 10-year JGB Bonds.

**TTN Chart of The Day: