U.S. Indices saw choppy action on Wednesday, as markets reacted to tariff source reports ahead of President Trump’s reciprocal tariff announcement scheduled in the Rose Garden after the markets closed. In the EU morning, risk sentiment soured on BBG source reports that China is said to restrict companies from investing in the US as it aims to give Beijing more leverage for potential trade negotiations with the Trump administration. Nonetheless, as US trade got underway for the day and in the wake of the cash open, sentiment reversed to see Treasuries pare gains, US indices pare losses, with the majority of G10 FX seeing gains versus the Dollar. The Japanese Yen was the G10 laggard and one of the few to see losses against the Dollar. Further on tariffs, Sky News reported that Trump’s tariffs will be banded 10%, 15% and 20%, depending on the country and by industry. Sectors are predominantly in the green with Consumer Staples, Communication Services, and Energy the only sectors in the red while Consumer Discretionary was the clear outperformer and buoyed by gains in Tesla (TSLA) (+5.3%) after Politico reported that Trump has told his inner circle, including members of his Cabinet, that Musk will be stepping back in the coming weeks from his current role as governing partner. However, WH Press Sec later said that was “no scoop”; Musk later responded to the Press Sec, “Yeah, fake news”. T-Notes and the energy complex traded off the risk environment with the ADP ignored and profit taking for the former likely taking place ahead of the aforementioned Trump tariff announcements. For the record, ADP topped expectations and printed towards the top end of ranges ahead of US payrolls on Friday. The headline ADP showed a 155k increase in private payrolls in March, above the 120k consensus and above February’s upwardly revised 84k (prev. 77k). Within the report, the ADP Chief Economist Nela Richardson said “Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors,”. Regarding wages, the median change in annual pay for job stayers slowed to 4.6% from 4.7%, and for job changers to 6.5% from 6.7% Y/Y. Note, Pantheon Macroeconomics highlights the data distracts more than it informs and recommends disregarding ADP’s forecast for private payrolls, given its poor track record in recent years. US Factory 0rders rose 0.6% (exp. 0.5%) in February to USD 594 billion from USD 590.4 billion in January, while ex-transport lifted 0.4%. Elsewhere within the release, shipments were up for the fourth consecutive month, lifted by USD 4.2 billion (or 0.7%) to USD 596.8 billion. Unfilled orders, up seven of the last eight months, marginally rose 0.1%, while the unfilled orders-to-shipments ratio was 6.81, falling from 6.84 M/M. Inventories, up four consecutive months, lifted USD 1.3 billion (or 0.1%) to USD 864.9 billion. Fed Member Goolsbee said hard data on the US economy is still pretty solid, and if they can get past this period of uncertainty, the underlying strength of the economy is still there. The Chicago Fed President added that people do not want to go back to the inflationary environment of 2021 and 2022. On tariffs, Goolsbee said the fear is if tariffs on imports jump out of just imports and move into other costs, or people freak out and change behaviour. Further on tariffs, Goolsbee said the problem is they are a supply shock. The 2025 voter said confidence is almost cratering and reiterated the notion from other officials that soft data looks very different from hard data. Elsewhere, Oil closed higher by 0.91% while Gold ended Wednesday with a gain of 0.3%.
After the markets closed last night, President Donald Trump stood in the White House Rose Garden to announce his new tariff plans. Giant American flags surrounding Trump set the mood. So did the audience of invited trade workers. The event was dubbed “Liberation Day” or “Make America Wealthy Again.” Investors and folks on Main Street have been speculating for months on what Liberation Day 2025 – rather than the one that marked the end of World War II in Europe on May 8, 1945 – might look like, especially regarding details about Trump’s tariff policy.
Finally, we got some answers:
A few hours before the press conference, the White House put out a video celebrating recent investments in American manufacturing (from the likes of Apple, SoftBank, and various automakers) plus trade commitments, totaling what it said are $5 trillion in investments since Trump returned for a second term. A little after 4 p.m. Eastern time, Trump began his speech by saying that this “Liberation Day” would be remembered as “the day America’s destiny was reclaimed.” Trump went on to say he would be signing an executive order imposing reciprocal tariffs on imports from “countries throughout the world,” effective at midnight Eastern time. “They do it to us, and we do it to them,” Trump said. He later explained that these are not “full reciprocal” but “kind” reciprocal tariffs, specifically tariffs on imports at roughly half the rate of what other nations charge on their U.S. imports. He continued ‘For nations that treat us badly, we will calculate the combined rate of all their tariffs, non-monetary barriers, and other forms of cheating and because we are being very kind… we will charge them approximately half of what they are and have been charging us. I could have done [full reciprocal], but it would have been tough for a lot of countries. We didn’t want to do that. Trump then held up a chart listing foreign nations and the associated numbers involved. He began with China: “67% tariffs charged to the USA, including currency manipulation and trade barriers… We’re going to be charging a discounted reciprocal tariff of 34%. In other words, they charge us, we charge them. We charge them less, so how can anybody be upset?” Trump also announced a 20% tariff on the European Union… a 46% tariff on Vietnam… a 32% tariff on Taiwan… a 24% tariff on Japan… 10% on the United Kingdom… and on and on… Roughly 60 countries are in play for new tariffs, the White House said. Trump also said there will be a “minimum baseline [tariff] of 10%,” a 25% tariff on all foreign-made automobiles, and that “if you want your tariff rate to be zero, you build your product right here in America.” Later today, we will see how the market digests these details since the announcement came after the U.S. markets closed. In after-hours trading, it did not look good, though. The S&P 500 Index was more than 2.5% lower as of about 6 p.m. Eastern time.
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