ON DECK FOR THURSDAY, APRIL 24
KEY POINTS:
- Antsy markets second guess trade progress
- China rejects US trade talks
- Bessent, Trump downplay China offer
- Trump renews insulting attacks on Canada, threatens higher auto tariffs
- US to update capital goods orders, home resales, claims
Very mild risk-off sentiment is pushing equities slightly lower across US and Canadian futures and European cash markets. Sovereign bond yields are gently lower across maturities and countries. Against a traditional risk-off set of moves is dollar weakness.
As for catalysts, it seems that nobody wants to play along with Trump’s hardball tactics on trade while his erratic ways are back on display as demand for shipping containers falls (chart 1). Call it the art of the misdeal and how the rest of the world believes the US administration isn’t playing with a full deck. A Chinese Commerce Ministry spokesman said China demands all US unilateral tariffs be removed before trade talks while saying “any reports on developments in talks are groundless.”
Speculation in the press by those mischievously labelled “people familiar with the matter” that the US was backing off tariffs was shot down by Bessent and Trump yesterday. Treasury Secretary Bessent said earlier in the day that there was no unilateral offer from the US to lower tariffs on China and insisted that there had to be agreement by both countries to de-escalate their trade war which China clearly rejected this morning. Then Trump said late yesterday that he was not considering lowering auto tariffs.
Trump also hurled fresh insults at Canada and indicated auto tariffs on the country could rise. He said “I have to be honest, as a state it works great.” Clearly honesty isn’t Trump’s thing, but he went on to repeat made-up nonsense about how the US “subsidizes” Canada by $200 billion per year, and grossly exaggerated the significance of US trade to Canada by saying “95% of what they do is they buy from us and they sell to us” which is several multiples of the actual trade share of Canadian GDP with the US. Trump is easily baited, and so in response to a question on whether he could raise tariffs on Canada he said “At some point, it could go up. All we’re saying is we don’t want your cars with all due respect.” Respect?? Trump??? Bwah.
Other overnight developments were light. German IFO business confidence was little changed in April even in terms of expectations. South Korea’s economy shrank by -0.2% q/q SA nonannualized (+0.1% consensus).
On tap in the N.A. session will be US macro reports including recently rising big-ticket core durable goods orders (chart 2) for March (8:30amET), US existing home sales for the same month (10amET), and weekly jobless claims (8:30amET). Canada refreshes the lagging and incomplete payrolls report for February (8:30amET); the timelier LFS jobs report for April won’t arrive for another two weeks.
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