U.S. Indices tumbled on Monday while the Treasury curve steepened in response to further pressure from US President Trump on Fed Chair Powell to lower interest rates. It remains to be seen if the President can fire Powell, but NEC Director Hassett suggested Trump is studying ways on how to do this. The fears of killing Fed independence from the government sparked the risk off session, but the front-end of the curve saw yields fall as it started to price in potentially earlier rate cuts, but the longer end of the curve saw yields rise with fears of cutting rates too-early would boost inflation. The downside in equities was steep with indices lower by 2.4% across the board, with slight underperformance in the NASDAQ 100 with reports that Huawei is readying a new AI chip for mass shipments as China looks for alternatives to Nvidia (NVDA) hitting the chip sector. On China, Trump said the US is having nice conversations with China, while China’s MOFCOM issued a statement, noting it is firmly opposed to any party striking a deal with the US at the expense of China, and if a situation arises, it will respond. Oil prices saw two-way trade with downside on the risk off environment with ongoing trade fears still weighing, while there were also hopes for progress between US and Iran, after Trump said he had a good meeting with Iran. He also suggested we could see a Ukraine/Russia deal this week. However, oil settled off lows with upside continuing post settlement, with Israeli press reporting the Air Force conducted drills simulating another Iranian missile attack in case talks between the US and Iran collapse. In FX, the Dollar was sold to the benefit of G10 peers on the aforementioned Trump criticisms of Powell, with both havens and cyclicals performing well against the Dollar, but CAD was hampered by weaker oil prices. Gold continues to benefit from the uncertain environment under the new administration, with the yellow metal hitting fresh record highs. Note, with UK and EU players were away for Easter Monday, and as such volumes lower than usual. Attention this week turns to Global Flash PMI data, earnings and central bank speakers. On earnings, highlights this week include VZ, TSLA, T, BA, IBM, PEP, MRK, PG, INTC, GOOGL. The Chicago Fed President (Goolsbee) said that short-run inflation expectations are up, but long-term expectations are not rising. He noted the impact of tariffs on the macro economy could be modest, and in response to calls for a pre-emptive cut, Goolsbee said “we do not know what the impact on the supply chain will be”. He reiterated his view that rates will be lower in 12-18 months, adding they need to wait it out and figure out what to do. He stressed it would be difficult if both sides of the Fed’s mandates were to go wrong, it is also about the magnitude and how long it lasts. On Fed independence, he said it is important, and noted the Fed Chair is the most important person at the table, their opinion carries a lot of weight. Elsewhere, Oil closed 1.8% lower while Gold surged a further 3%, closing above $3430 and yet another new-all-time high.
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For anyone following my Platinum Service it made 525 points yesterday and is now ahead by 6980 points for April after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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