Written Commentary
- Tech tariff relief likely to be short lived, as China Trade and Credit Aggregates, Singapore GDP and MAS policy easing are digested; NY Fed Expectations, corporate earnings and Fed speakers ahead
- China: export surge not a great surprise in context of tariff wars, softer than expected imports both a function of weak domestic demand and disruption to Brazil sot exports
- Week Ahead: China and US activity data, UK jobs and inflation, ECB and BOC rate decisions, slew of corporate earnings and miners’ production reports to vie with overarching trade war theme
- Charts/Tables: China Commodities Trade; Fed custody holdings of Treasuries; VIX vs MOVE volatility indices; EUR and JPY vs. USD long-term charts
EVENTS PREVIEW
Trade wars remains the overarching theme on what is a relatively light day for data and events, with China’s March Trade data and earnings from CATL, Singapore’s worse than expected Q1 GDP contraction and accompanying policy easing from MAS to digest, and US NY Fed Inflation Expectations (see preview in Week Ahead below), the OPEC monthly Oil Market Report, earnings from Goldman Sachs and a number of Fed speakers ahead. While there is some relief evident in equity markets at the temporary carve out of electronics and semiconductors from US reciprocal tariffs, the US administration has been at pains to emphasize that sector specific tariffs will be rolled out soon, as such the relief will inevitably be short-lived.
** China – March Trade Balance **
– Much stronger than expected exports (13.5% y/y) will have come as a surprise to nobody, given the rush to pre-empt tariffs has already been well documented, but the question remains how soon will export volumes collapse because of the US trade tariffs. The somewhat larger than expected fall (-4.5 y/y) in imports was primarily a function of weak Soy imports due to disruptions in Brazil, as well as drops in Iron Ore and Coal predicated by weak domestic demand, which a surge in Iranian oil imports could not offset. While the trade data were well wide of forecasts, the market impact was always likely to be modest, given the escalated impasse on trade between the US and China.
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