Rise and shine everyone
It’s not a very happy Friday morning, as we get more bad news on tariffs. First, a possible 25% tariff on Apple, if they don’t make iPhones in the US and continue to manufacture them in the US. It’s likely going to still be cheaper for Apple to manufacture overseas but, this just adds to the cost.
And second, a 50% tariff on the EU starting Jun 1, 2025.
None of this bodes well for the current situation, and US equity futures are tumbling on the news. Crude oil is also down on the prospect of trade uncertainty and the OPEC+ possibly increasing production.
US Treasury Yields are also down, alongside the USD Index. As expected, the EUR, the GBP and the Yen are all strengthening. Bitcoin is down over -3.5%.
Gold is the only safe haven asset at the moment, up 1.7%.
This is exactly what we were worried about earlier this week. The negotiations were seemingly not going well, and now it looks like the US is not willing to change their stance on some of the tariffs.
The tariffs have been discussed as a source of revenue and if the new tax cuts go through, it makes sense that there will be some push back to keep some of the higher tariffs in place to offset that revenue. It still won’t be enough, but it will be something.
In international news, Japan is still seeing bond yields rise. 10-year yields were up 3bps to 1.568% and 30-year yields adding 2.5bps after hitting record highs earlier in the week. The BOJ’s bond auction for 10-25 year JGBs drew weak demand, with total bids of ¥314B—about half of shorter maturities—and a much wider tail. This came alongside a Nikkei report flagging the first corporate earnings decline in six years.
Calendars
(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)
