Are we seeing a Trump u-turn?

Good morning

It felt like a bit of a holiday day yesterday and judging by the number of email bounce backs I got from sending my reports yesterday it would seem that many people are indeed still in a bit of holiday mode.  Most kids are back to school this week so those readers whose commute involves driving a car should prepare for a bit more traffic. 

The IMF meeting took most of the headlines yesterday, as they lowered global growth forecasts from 3.3% to 2.8%.  They said that US is likely to be hardest hit among advanced economies this year, with growth forecasts lowered from the 2.7% they forecast in January to just 1.8%.  Trump should take note from the IMF chief economist who made it clear that central banks should remain independent. 

This follows Trump’s attack on Powell that send the US markets lower on Monday, although we did see a rebound in US prices yesterday and European exchanges were generally up on the day as Trump suggested he had no plans to fire Feds Powell.  Trump also said he’d be ‘very nice’ to China if they came to the trade negotiations table, some talk of a Trump/Xi meeting in early May.  Asian equities were higher overnight and futures prices point to higher levels in global markets again today.

The US dollar was broadly unchanged with GBPUSD spending most of the day in the high 1.33’s and EURUSD in the high 1.14’s although into the London close there was a little USD buying that took those pairs off their highs and also helped USDJPY tick up to 141.25 from the morning low below 140.00.  IMF then said that it is possible the UK sees three rate cuts this year, driven by a slower economy despite sticky inflation.  UK growth forecasts slashed from 1.6% to 1.1%.

GBPUSD slipped below 1.3300 briefly, now 1.3315, although has fared better than its European neighbour which is currently 1.1395, leaving GBPEUR higher at just short of 1.1700, perhaps reports that US are negotiating a trade deal with the UK is helping GBP.  Markets seem to be ignoring the latest ONS government borrowing numbers which show a deficit of £152bn, some £15bn higher than the OBR forecast from just a month ago at Reeves spring statement.  Questions over Reeves fiscal policy faces some pretty serious questions.

Tesla stock price rose 5% yesterday as Musk announces he’ll reduce his DOGE role in the wake of a backlash against his electric vehicles.  With some more conciliatory talk coming from Trump and his White House crew, whether over China or Powell, I wonder whether this is a deliberate softening of approach given the widespread opposition the government policies have faced.  When I say ‘softening’, some would say ‘u-turn’.

Putin has suggested he is open to peace talks and says the Ukrainian invasion could be halted along the current front line.  It would seem that Putin would want the US, and the world, to agree that Crimea is recognised as part of Russia, rather than an illegal annex.  Ukraine will not want that, but it is becoming apparent there is little chance of peace unless Ukraine accept they will have to give up some ground.

Man City got a last minute win against Aston Villa last night which sent them into third just above Forest, while Villa’s chances of a top four or five finish are hit hard. Arsenal will be looking to secure their second place in the league as they take on Crystal Palace who have only won one league match in the last five they have played.

Today is all about PMI’s.  Up first is the EU release, UK follows 30 minutes later and then we have the US equivalent in the afternoon.  We’ll also hear from several central bank officials and UK Chancellor Rachel Reeves speaks at the IMF conference, let’s hope they don’t ask her too many difficult questions, I’m of course talking about CV based questions rather than her fiscal policy.

Anyone lucky enough to have gone to warmer climates over the Easter holidays will be brought smartly down to earth today, we’ve had some pretty heavy rain here and the forecast suggests it’ll take a few more hours to dry.  Looking ahead though, the very end of April in forecast to see temperatures above 20°c.  Other than this morning, we’ve not had bad weather recently, but it’s not been hugely warm.  I’m looking forward to May and some hotter weather.

Have a great day…

-  09.00 EU services, manufacturing PMIs

-  09.30 UK S&P services, manufacturing PMIs

-  11.30 BoEs Pill speaks

-  14.00 Feds Goolsbee speaks

-  14.30 Feds Muslaem speaks

-  14.35 Feds Waller speaks

-  14.45 US S&P services, manufacturing PMIs

-  15.00 US new home sales

-  18.15 BoEs Bailey speaks

-  19.00 BoEs Breeden speaks

-  19.00 Feds Beige book

-  20.15 ECBs Lane speaks

-  20.45 ECBs Cipollone speaks