Related Insights
The DXY Index depreciated by 0.5% to 98.9 overnight after failing to push above 100 in the past three sessions. The Fed has entered a blackout period ahead of next week’s FOMC meeting. Expect US President Donald Trump to complain about Fed Chair Jerome Powell again when the committee maintains rates at 4.50% for the third consecutive meeting. Trump’s inability to refrain from interference was evident in his call for Canadians to vote for the ”51st State” during their federal election on April 28.
The futures market is banking on incoming US data to justify the four Fed cuts it discounted for June-December.
Today, consensus will likely be wrong-footed in expecting the US trade deficit to narrow to USD145bn in March from USD147.8bn in February. The Atlanta GDPNow model only started predicting in March that US GDP could contract in 1Q25 from a frontloading of imports to beat Trump’s tariff announcement on Liberation Day (April 3). The same could be said for tomorrow’s advance estimate for 1Q25 GDP growth, which consensus expects will still be positive at an annualized 0.3% QoQ saar vs. 2.4% in 4Q24.
The expectation for today’s US Conference Board consumer confidence index to decline to 88 in April from 92.9 in February should align with the shocking stock market sell-off triggered by Trump’s tariffs. Expect consumers to worry more about emptying supermarket shelves raising prices and mortified businesses slowing investment and hiring plans. Friday’s nonfarm payrolls are expected to slow to 134k in April from 228k in March. However, consensus sees tomorrow’s PCE inflation slowing to 2.2% YoY in March from 2.5% in February, as businesses have not yet factored in the larger-than-expected tariffs announced on Liberation Day.
US Treasury Secretary Scott Bessent wants to push the bill to extend Trump’s 2017 Tax Cuts and Jobs Act (TCJA) by Independence Day (July 4). He may announce a new X-date by the end of this week or next week and advocate increasing the federal debt ceiling by USD 4-5 trillion. The Congressional Budget Office has estimated that the Treasury could exhaust its borrowing authority around August-September, while the Bipartisan Policy Centre estimated a broader window between mid-July and early October. The US Treasury 10Y yield eased by 2.7 bps to 4.208%, reckoning that Bessent would be cautious in managing the federal debt and avoid another bout of market volatility. Nonetheless, meeting this tight deadline via budget reconciliation will be no mean feat. The push for an Independence Day announcement also reflects Trump’s urgency to divert attention from the economic pain caused by his tariff agenda.
We maintain our downside bias for the greenback.
Quote of the Day
“The difference between the right word and the almost right word is the difference between lightning and a worm.”
Peter Roget
April 29 in history
The first edition of the Roget’s Thesaurus was published in Great Britain in 1852
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