Living for a few weeks at the risk of the US -led trade war, the financial market resumed on Monday and had to deal with reality.
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(Bloomberg) -This for several weeks has lived at the risk of the US -led trade war, and financial markets have resumed on Monday, when they need to deal with reality.
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Investors have promoted a commitment to Donald Trump imposing a general tax on Canada and Mexico, imposing 10 % of Chinese products on Tuesday, and retaliation from others. President Trump has supported US dollars in early Asian trading to avoid shares to avoid shares. government.
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US currencies have progressed to most major colleagues, and S & P 500 futures slid nearly 2 %, and Canadian dollars have weakened to the lowest since 2003. The US tariff threat to China was particularly exposed to about 1 %. Originally, it was about 0.5 % weaker offshore.
Customs -only stories have benefited the green back since Trump's election. Last week was the best since mid -November, and the Bloom Burgdor Spot Index increased by almost 1 %. The US stocks fell on Friday with a company exposed to China, which led by car manufacturers and slides. Bond traders need to decide whether to focus on the rise in market risks or to focus on inflation concerns. This is the Ministry of Finance futures that fluctuated in the early transaction on Monday.
Stephen Jen, the highest executive officer of Eurizon Slj Capital, said: “This should support more dollars and higher US yields for a short period of time.”
Behind the bullish dollar's position is that customs duties promote inflation's pressure, continue to increase US interest rates, damage the foreign economy more than the United States, and add a safe Greenback Haven Lure. It is a bet. Foreign currency is damaged as the US demand decreases in expensive imports.
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Global reaction: Trump tariff is 1.2 % US GDP hit, 0.7 % PCE boost risk
“President Trump, which indicates that the dollar may be too strong, could affect financial markets, but the overall outlook remains the same. Customs and domestic inflation pressure. A strategist of Mizuyama Securities in Tokyo in Tokyo.
“It is expected to apply pressure to hit Peso and Canada dollars in the opening of tomorrow's Asia, but it is difficult to evaluate how serious the movement is.” , Literally, it will start accepting seriously, so you may receive a painful adjustment process in the coming week.
Marco Oviedo, a strategist of Sao Paulo's XP INVESTIMENTOS, stated that tariffs were “obviously shrinky” for Mexico. According to Credit Agricole's emerging market research and strategic head of Olga Yangol, pesos should be 23 in indefinite duties and 23 per dollar. It is far below 20.67 per dollar, which was the last transaction on Friday.
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The Australian dollar pure short position, worth $ 4.5 billion, has been the best in nearly 10 years. According to Mizuhoemia, Trump also threatens to the European Union, which may weaken the euro and potentially reach the dollar in March.
“Currently, navigating the currency market feels like trying to interpret chaos theory in real time,” said Tifo Rouane of Bermuda's Conyers Trust. “It is not surprising that the Forex market is acting with geoperics, unprecedented possibility without policies, and the rapid increase in the trajectory of various economic recovery.”
Stock whiplash
Traders are wary of large -scale fluctuations in the stock market of sector, which are considered to be the forefront of all trade wars. The UBS Group Basket, which was risky from proposed tariffs, was about 4 % of the tax on Friday, causing inflation and making a profit.
Car manufacturers such as General Motors Co. and STELLANTIS NV have global supply chains and large -scale exposure to Mexico and Canada, but there is a great deal of movement. Electric car manufacturers Tesla Inc. and Rivian Automotive Inc. were also able to feel a pinch. The word “tariff” has already increased rapidly with the call of revenue.
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NASDAQ GOLDEN DRAGON CHINA INDEX is composed of companies that are doing business in China but trade in the United States, decreasing 3.5 % on Friday.
Singapore's TD Securities strategist Prashant NewNAHA states: “The supply chain headache is back, the cost is high, and the price is high.”
… The dollar continues to be supported by the cheerful founding of support. Non -profit traders continue to hold $ 33.7 billion net long positions. Hedge funds have a long back on the green back, according to the deal desk. These investors may put these positions until the retaliation is announced. “
-Alyce Andres, US rates/FX strategists, Markets Live
Mr. Trump said last week that he was focusing on his market response to trade policy, but the Colombian thread, thread, and investment rate strategist Ed Al Fussainy said, “Possibility of retaliation. We have started the highest risk duties strategy. ” “
“I'm looking forward to tightening the financial state,” he said. “Drawdown of stocks, consider a wider credit spread.”
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The Ministry of Finance was able to make a profit earlier this year in a cooler inflationata than planned. However, bond traders need to balance the risks of market and the Trump bias in order to restrict immigration and financial policy to compete with tariff inflation.
The Bloomberg US Financial Index rises about 0.5 % a year. “If the stock remains, investors are hoping that the bonds will flock,” said Subadra Rajappa, a SOCIETE GENERALE USA strategy. “The impact of higher tariff inflation can lead to higher inflation expectations and flat curves.”
The fixed income market faces several other issues in the next few days. After a policy proprietor paused the easing cycle last week and was in a hurry to reduce it again, data on employment and inflation that helps form the expectation of the federal preparation system is imminent. First, the announcement of the first Ministry of Finance refund under the Trump administration on Wednesday.
“The yield is high, the risk is low. In our opinion, it is a” mistake “to stick to every view, so it will be a higher volatility,” said American Rate Transactions and Strategy. Gregory Faranello, a person, states. “It's definitely interrupted. You give it to it, it's on the table right now, and the Fed is not hurrying anything right now.”
-Learn from Maria Elena Viscaino, Michael Owil, Esha Day, Michael G. Wilson, Matthew Burgess, Nicole Yapur.
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