Author: admin

Authored by Katabella Roberts via The Epoch Times,

The Trump administration was sued by a nonprofit civil rights group on April 3, with the organization saying that President Donald Trump overstepped his authority when he imposed tariffs on Chinese imports.

The lawsuit, filed in federal court in Florida by the New Civil Liberties Alliance (NCLA), alleges that Trump lacked the legal authority to impose the sweeping tariffs unveiled this week, as well as levies he introduced on Feb. 1 by invoking the International Emergency Economic Powers Act (IEEPA).

NCLA filed the lawsuit on behalf of Simplified, a Florida-based retailer that sells home management products and imports materials from China.

The lawsuit lists Trump, Department of Homeland Security Secretary Kristi Noem, Acting Commissioner for U.S. Customs and Border Protection (CBP), Pete Flores, and CBP as defendants.

The lawsuit comes a day after Trump announced broader levies on nearly all U.S. trading partners as part of what he described as efforts to balance trade deficits.

According to the lawsuit, the IEEPA authorizes specific emergency actions—such as imposing sanctions or freezing assets—to protect the United States from foreign threats, but it does not authorize the president to impose tariffs.

“The Constitution assigns Congress exclusive power to impose tariffs and regulate foreign commerce,” the lawsuit states.

“Presidents can impose tariffs only when Congress grants permission, which it has done in carefully drawn trade statutes.”

Typically, these statutes authorize tariffs only on industries or countries that meet “specified criteria,” and only under “specified conditions,” after following certain procedures, the lawsuit states. “Such statutes require advance investigations, detailed factual findings, and a close fit between the statutory authority and a tariff’s scope.”

Trump has declared an emergency over China’s alleged role in facilitating the flow of illicit fentanyl into the United States.

The lawsuit argues his justification is a pretext for imposing tariffs with the goal of reducing U.S. trade deficits while boosting tax revenue.

“President Trump is attempting to bypass these constraints by invoking the IEEPA,” plaintiffs write in the lawsuit. 

“But in the IEEPA’s almost 50-year history, no previous president has used it to impose tariffs. Which is not surprising, since the statute does not even mention tariffs, nor does it say anything else suggesting it authorizes presidents to tax American citizens.”

According to the legal filing, Trump’s tariffs on China will force Simplified to make higher tariff payments, driving up its costs and thus prices for its customers, while simultaneously reducing its profits.

The lawsuit asks the court to block the tariffs from being implemented and enforced and to undo Trump’s changes to the U.S. tariff schedule.

Trump announced on April 2 that goods imported from China, as well as Hong Kong and Macau, will be hit with a 34 percent duty under his new tariff plan. That is on top of the 20 percent tariff he imposed on China in February, bringing the total new levies to 54 percent.

Speaking from the Rose Garden at the White House, Trump stated that the tariffs will lead to increased jobs and domestic production while also lowering prices for consumers.

“This will be indeed the golden age of America,  it’s coming back we’re going to come back very strongly,” Trump said.

A spokesman for China’s Ministry of Foreign Affairs said the tariffs violate World Trade Organization rules and “undermines the rules-based multilateral trading system.”

“China firmly rejects this and will do what is necessary to defend our legitimate rights and interests,” the spokesperson said.

The Epoch Times contacted the White House for comment but did not receive a response by publication time.

Ukrainian President Volodymyr Zelensky continues to test President Trump, this time contradicting the US leader on the question of Ukraine’s future membership in NATO.

Trump has clearly taken it off the table, as even NATO Secretary-General Mark Rutte has recently recognized. But Zelensky in fresh comments said he has not given up on Ukraine’s pursuit of NATO accession.

“You know who does not support Ukraine’s membership in NATO so far, but in any case, no one is removing this issue from the table for the future,” Zelensky said, as quoted in Ukrinform news agency on Friday.

“At least, we are talking about the fact that even if now someone does not want to support [Kiev joining the bloc], we will see what happens in the future,” Zelensky added.

He went on to explain in the comments that until membership in the Western military bloc happens, Kiev should be provided with “NATO-like security guarantees” by its allies and partners.

Ukraine must be “strong when getting to the negotiating table” in order to achieve a “just peace,” Zelensky said.

Earlier this week, President Trump made clear in reference to Zelensky that “he wants to be a member of NATO. Well, he was never going to be a member of NATO. He understands that.”

The issue of NATO constantly expanding right up to Russia’s borders, which especially ramped up in the mid-2000s during the Bush era, had been consistently identified by President Putin as a key motive in his ordering hundreds of thousands of Russian troops into Ukraine in February of 2022.

Russia saw its ‘special military operation’ as a continuation of a war in Donbass that was already burning since 2014, which saw CIA and Western intelligence assist Kiev in seeking to push back Russian influence. But the reality has always been that natives on the Donbass are overwhelmingly Russian-speaking and pro-Moscow.

Trump also this week while speaking to reporters aboard Air Force One that negotiations have produced “a lot of good conversations about Ukraine and Russia.”

Ukraine joining NATO, as our president said, is “not at all possible,” says Putin envoy Kirill Dmitriev. “That, I think, has been widely accepted, including by the Trump administration.”

Ukraine joining NATO, as our president said, is NOT AT ALL POSSIBLE — Dmitriev

‘That, I think, has been widely accepted, including by the Trump administration’ https://t.co/ZXuezRJdJL pic.twitter.com/rpxUJUC0PP

— RT (@RT_com) April 4, 2025

“We like to see [the war] stopped as soon as possible because thousands of people have been killed in a week,” Trump said. “Europe has not been successful in dealing with President Putin, but I think I will be successful.” Ukraine’s government has been angry that the White House has pursued direct, bilateral negotiations with Moscow, effectively sidelining the Ukrainians.

Exactly one month ago we reminded readers, and the new generation of traders who may have been in kindergarten during the first trade war of 2017-2018, that a core feature of the market rollercoaster that marked Trump 1.0’s reign is crashing markets… and strategically timed trial balloons meant to push stocks sharply higher, to wit:

For those who already forgot the first Trump trade war, we are nearing the time when everyone turns apocalyptically bearish and the White House leaks a bullish “trade war deal” trial balloon.

— zerohedge (@zerohedge) March 4, 2025

And sure enough, we got a vivid reminder of just that moments ago when Trump, on his Truth Social account, announced that he had a “very productive” call with the head of the Vietnamese communist party, adding that if Vietnam wants to cut their tariffs to “ZERO”, all they have to do is “make an agreement with the U.S.”…

… or precisely what we said two days ago when we explained that this particular trade war will be all about the deals that Trump completes as he pulls the country and market from the abyss.

That was quick: Thailand to Negotiate With the US on 36% Imposed Tariffs: PM

Next: everyone else

— zerohedge (@zerohedge) April 3, 2025

Everyone else…. starting with Vietnam, which as we profiled yesterday was slapped with some of the highest reciprocal tariffs…

… crushing countless US consumer companies who rely on cheap Vietnamese exports.

But wait, there’s more… because with Fed Chair Jerome Powell set to speak momentarily, Trump reminds the Fed chair who really is boss when in a subsequent post on TS, the president said that “this would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always “late,” but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months – A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”

Considering recession expectations are soaring, while inflation expectations – based on the impartial market and not a bunch of Democrats “polled” by marxist professors at the University of Michigan – are collapsing…

… we would have to a agree with Trump who is surely wondering why the Fed cut rates in September when growth expectations were much higher, and why Powell isn’t doing the same now.

The market reaction was prompt, with futures reversing losses and jumping, if not so much to the implicit Powell threat, then certainly to the possibility that one after another country will now line up to get a trade deal done with Trump.

With markets still in turmoil over tariffs, investors now turn their attention to what Fed Chair Powell says this morning for clues on the state of the US economy and the path for easing. 

President Trump has made it clear what he wants:

This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. 

He is always “late,” but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months – A BIG WIN for America. 

CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!

Always watching…

However, Bloomberg’s Anna Wong believes Powell could adopt a decidedly more hawkish tone, dashing hopes that a “Fed put” to rescue investors is just around the corner.

Even with markets crashing around him, we see a high chance of a hawkish pivot. Since Powell last spoke March 19, President Donald Trump has announced the highest level of US import tariffs in a century. 

The consensus among economists – and from internal Fed models – is that core PCE inflation will likely come in above 3.5% in the fourth quarter of this year. 

In the mean time, the hard economic data remain solid. 

From his perspective, Powell likely assesses he can no longer claim “uncertainty” as a reason to avoid sending a clear signal about inflation. We expect he’ll say that in case of a conflict between the Fed’s dual mandates – full employment and price stability – the Fed will prioritize the latter. That’s a point he has made in the past, at the height of the inflation flare in 2022.

“The Fed is in a tough spot,” said Gang Hu, managing partner at Winshore Capital Partners, as this morning’s big positive surprise payrolls print makes it harder for Powell to hint at ‘Fed Put’ cuts to save the world as stocks fall (Good News is Bad News).

Al-Hussainy, rates strategist at Columbia Threadneedle Investment, says “the market is betting that recession risks and the tightening of financial conditions will force the Fed to cut aggressively” now up to 100bp this year and rising.

As for Powell’s speech, Al-Hussainy says: 

“If we get any pushback against this from Powell & Co., front end rates may end up offside.”

Markets are already fully pricing in a quarter-point move by June, with the chance of an emergency inter-meeting cut rising rapidly…

Open interest in the April fed funds futures has soared following Thursday’s action, which included a big block buyer for 48,000 contracts over the morning session, equivalent to approximately $1.9 million per basis point in risk. Open interest jumped in the tenor, Friday data showed, signaling the trade as a new long position rather than covering an existing short.

At 8:57am New York, 48,000 SOFR April fed funds futures blocked at 95.6750, with price action consistent with a buyer…

…and almost 5 full rate-cuts are priced in for the whole of 2025…

That is dramatically more cuts than The Fed expects in its Dot Plot.

“The markets will find it hard not to price in more Fed cuts until risk sentiment stabilizes,” said Jordan Rochester, head of macro strategy for EMEA at Mizuho International Plc. 

“At this stage, I suspect they will be cautious to give too much of a steer for markets given the inflationary issue tariffs may cause.”

Hard data (like the jobs report) continue to strength while ‘soft’ survey data plunges…

The question is – will the former finally crack and catch down to the latter?

“This jobs report is going to create an absolute mess for the Fed response to economic risks,” said Guy LeBas, chief fixed income strategist for Janney Montgomery Scott. 

“The ‘best’ case for risk assets is that the data deteriorate quickly enough to generate a Fed response. The bad case for risk assets is that jobs muddle through in the face of warmer short-term inflation prints.”

Mohamed El-Erian posted on X:

I hope that, in his remarks in a couple of hours, Federal Reserve Chair Powell will find the opportunity to elegantly walk back two things he said at his last FOMC press conference. Specifically,

• Retire once again the word “transitory” from his vocabulary when talking about the potential inflationary impact of tariffs; and

• Avoid readily dismissing the soft data.

This is a highly uncertain economic situation that calls for humility at the Fed rather than unnecessarily risking its credibility by repeating the horrible communication errors of 2021-22.

Watch Fed Chair Powell speak live here (due to start at 1125ET):

Authored by Stephen Katte via CoinTelegraph.com,

European Union regulators are reportedly mulling a $1 billion fine against Elon Musk’s X, taking into account revenue from his other ventures, including Tesla and SpaceX, according to The New York Times.

EU regulators allege that X has violated the Digital Services Act and will use a section of the act to calculate a fine based on revenue that includes other companies Musk controls, according to an April 3 report by the newspaper, which cited four people with knowledge of the plan.

Under the Digital Services Act, which came into law in October 2022 to police social media companies and “prevent illegal and harmful activities online,” companies can be fined up to 6% of global revenue for violations.

A spokesman for the European Commission, the bloc’s executive branch, declined to comment on this case to The New York Times but did say it would “continue to enforce our laws fairly and without discrimination toward all companies operating in the EU.”

In a statement, X’s Global Government Affairs team said that if the reports about the EU’s plans are accurate, it “represents an unprecedented act of political censorship and an attack on free speech.”

“X has gone above and beyond to comply with the EU’s Digital Services Act, and we will use every option at our disposal to defend our business, keep our users safe, and protect freedom of speech in Europe,” X’s global government affairs team said.

Source: Global Government Affairs

Along with the fine, the EU regulators could reportedly demand product changes at X, with the full scope of any penalties to be announced in the coming months. 

Still, a settlement could be reached if the social media platform agrees to changes that satisfy regulators, according to the Times. 

One of the officials who spoke to the Times also said that X is facing a second investigation alleging the platform’s approach to policing user-generated content has made it a hub of illegal hate speech and disinformation, which could result in more penalties.

X EU investigation ongoing since 2023

The EU investigation began in 2023. A preliminary ruling in July 2024 found X had violated the Digital Services Act by refusing to provide data to outside researchers, provide adequate transparency about advertisers, or verify the authenticity of users who have a verified account.

X responded to the ruling with hundreds of points of dispute, and Musk said at the time he was offered a deal, alleging that EU regulators told him if he secretly suppressed certain content, X would escape fines. 

Thierry Breton, the former EU commissioner for internal market, said in a July 12 X post in 2024 that there was no secret deal and that X’s team had asked for the “Commission to explain the process for settlement and to clarify our concerns,” and its response was in line with “established regulatory procedures.” 

Musk replied he was looking “forward to a very public battle in court so that the people of Europe can know the truth.”

Source: Thierry Breton

In a tensely-awaited but ultimately unanimous decision, South Korea’s Constitutional Court on Friday finalized the ouster of President Yoon Suk Yeol, putting its stamp of approval on his impeachment for having declared martial law on Dec. 3. While some hope the decision will end the country’s biggest political crisis in decades, South Koreans must now choose a new president at a time of intense internal discord, alongside an economic shock in the form of President Trump’s 25% tariff. 

The 8-0 ruling came after weeks of hearings followed by weeks of deliberation. Millions of South Koreans watched the announcement on live television, with many gathering with crowds convening to show either support or opposition of the impeachment. Wary of violence, authorities put some 14,000 police on standby, and gave police advance rules of engagement that cleared them to use pepper spray and batons.  Palaces and other important Seoul facilities were closed, and the US embassy cancelled routine business. As this is written, there are no reports of violence — yet. Yoon’s party said it “humbly” accepted the ruling, which makes Yoon the second president to have been impeached in the country’s history.   

Acting Chief Justice Moon Hyung-bae made the announcement at 11am local time: 

“Given the serious negative impact and far-reaching consequences of the respondent’s constitutional violations, we hereby pronounce the following ruling, with the unanimous agreement of all Justices. (We) dismiss respondent President Yoon Suk Yeol.…

He committed a grave betrayal of the trust of the people, who are the sovereign members of the democratic republic…The president took actions beyond the powers. He did not merely declare martial law, but went on to commit acts that violated the Constitution and the law, including mobilizing military and police forces to obstruct the National Assembly’s exercise of its authority

Video captured an anti-Yoon crowd’s reaction:

South Korea faces snap election in sixty days as court upholds Yoon’s impeachment https://t.co/jAscuaH5Dy pic.twitter.com/yAZRijDtCv

— RT (@RT_com) April 4, 2025

Tensions had mounted as South Korea awaited Friday’s ruling. Over recent months, enormous demonstrations organized by both supporters and opponents of Yoon were a regular occurence. Ahead of the ruling, rhetoric ran hot. “If President Yoon is not reinstated, there will be a civil war,” said influential Pastor Jun Kwang-hoon, who has organized pro-Yoon demonstrations. He’s described his work as a battle against “Communist Reds.” In two indications of the passion on both sides, opposition-party members have staged hunger strikes in Seoul, while two Yoon partisans self-immolated in protest of his impeachment. 

For now, the ruling leaves acting president and prime minister Han Duck-soo atop South Korea’s government. In an indication of the turmoil that has rocked the country since Yoon’s early-December power move stunned the world, Han was himself impeached two weeks into his acting presidency, accused of aiding and abetting Yoon’s martial law declaration. Last month, the Constitutional Court negated his impeachment, reinstating him as acting president. 

Per South Korea’s constitution, an election must now be held within 60 days to choose his successor. Recent polls suggest that Lee Jae-myung of the center-left Democratic Party of Korea (DPK) is the clear favorite. Unlike Yoon, Lee recently came out on the right side of a court ruling:  His conviction on charges of making false statements during his 2022 presidential campaign was overturned in March. That case centered on Lee’s having denied he knew a businessman involved in corruption-stained real estate development project. The High Court ruled that the evidence had been insufficient. In January 2024, Lee survived a would-be assassin’s knife attack that left Lee bleeding from his jugular vein.   

STREET PARTY AS YOON SUK YEOL IS REMOVED AS PRESIDENT. pic.twitter.com/mHjl3XJRlB

— Raphael Rashid (@koryodynasty) April 4, 2025

In his stunning late-night declaration of martial law in December, Yoon railed against “shameless pro-North-Korean anti-state forces who are plundering the freedom and happiness of our citizens,” promising that he would “eliminate anti-state forces as quickly as possible and normalize the country.” Soldiers and police immediately surrounded the National Assembly, but 190 of the 300 members of parliament managed to unanimously vote to annul the martial law declaration. Yoon retracted it and apologized, but was impeached in the following days. In his Constitutional Court hearings, he said the move was necessary to “alert the public” to the “wickedness” of the opposition.  

The 64-year-old Yoon may lose more than the presidency — he has been criminally charged with insurrection, and his trial begins on April 14. His defense minister, Kim Yong-hyun, is likewise in legal peril. He resigned upon being charged with insurrection, and then attempted to kill himself hours later in police custody. Lawmakers accused him of sending drones to Pyongyang, North Korea to spark retaliation and give Yoon a pretext for martial law. The country’s top two law enforcement officers were also arrested. 

After today’s shocking retaliation by China, which hiked tariffs on US goods by 34%, the jobs report was an afterthought. To be honest, it would have been an asymmetric afterhought any way, as any upside would have been viewed as stale and not reflecting the new tariff reality, while any miss would have cemented the recession case. And while the market is certainly far more focused on the ongoing trade war, in the end, the March jobs report ended up being far stronger than expected, as the US added a whopping 228K jobs, the highest since December and more than double the 117K in February (revised lower from 151K)…

… and beating the consensus estimate of 140K by 3 sigma

The number was also above the highest estimate from Wall Street analysts, which was 200K.

The change in total nonfarm payroll employment for January was revised down by 14,000, from +125,000 to +111,000, and the change for February was revised down by 34,000, from +151,000 to +117,000. With these revisions, employment in January and February combined is 48,000 lower than previously reported.

The unemployment rate rose from 4.1% to 4.2%, above the estimate of an unchanged print…

… as the number of unemployed workers rose modestly to 7.083 million from 7.052 million, even as the labor force rose fractionally from 170.359 million to 170.591 million.

And tied to that, while the Establishment survey rose by 228K, the Household survey also improved by a similar amount, with the number of employed workers rose by 201K, to 163.508 million.

Turning to wages, there was some more good news in the report, at least for those hoping for a fed rate cut: while the monthly average hourly earnings rose 0.3%, as expected and the same as last month, the annual increase in wages was 3.8%, down from 4.0% last month and below the 4.0% estimate, suggesting the wage growth continues to cool sharply, allowing the Fed to resume rate cuts.

Some more detailed from the jobs report: 

• The number of people employed part time for economic reasons, at 4.8 million, changed little in March. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs.
• The number of people not in the labor force who currently want a job was essentially unchanged at 5.9 million in March. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a
• Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force, at 1.7 million, was essentially unchanged in March. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, changed little at 509,000 in March.

Next we go through the qualitative breakdown of the Establishment survey, where we find that job gains occurred in health care, in social assistance, and in transportation and warehousing. Employment also increased in retail trade, partially reflecting the return of workers from a strike. Federal government employment declined.

• Health care added 54,000 jobs in March, in line with the average monthly gain of 52,000 over the prior 12 months. Over the month, employment continued to trend up in ambulatory health care services (+20,000), hospitals (+17,000), and nursing and residential care facilities (+17,000).
• Employment in social assistance increased by 24,000, higher than the average monthly gain of 19,000 over the prior 12 months. Over the month, individual and family services added 22,000 jobs.
• Retail trade added 24,000 jobs in March, as workers returning from a strike contributed to a job gain in food and beverage retailers (+21,000). General merchandise retailers lost 5,000 jobs.
• Employment in transportation and warehousing rose by 23,000 in March, about double the prior 12-month average gain of 12,000. In March, job gains in couriers and messengers (+16,000) and truck transportation (+10,000) were partially offset by a job loss in warehousing and storage (-9,000).
• Within government, federal government employment declined by 4,000 in March, following a loss of 11,000 jobs in February. (Employees on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey.)

Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; information; financial activities; professional and business services; leisure and hospitality; and other services.

Here is a visual summary:

Commenting on the numbers, Trump posted on Truth Social that job numbers were “far better than expected” and that “it’s already working.”

Trump’s tweet suggests that contrary to some expectations, the president isn’t actually looking to throw the economy in a recession, but will push to keep it from crashing while he is playing the great game of trade war chicken with China and the rest of the world, which makes lives for traders more difficult as it means the Fed will have to make decisions on a tweet by tweet basis, which will be problematic.

Meanwhile, others disagreed: here is Seema Shah from Ptincipal Asset Management who encapsulates prevailing sentiment well:

“Everyone knows that economic weakness is coming, but at least we can be reassured that the labor market was robust coming into this policy-driven shock and therefore, the slowdown should not be overly steep. Next month is when hard data is likely to start showing signs of what soft data has already been signalling. From the Fed’s perspective, today’s payrolls number will not prevent them from future policy rate cuts – they know that this is just a moment of calm before the storm hits.”

Gregory Faranello, strategist at AmeriVet Securities, explained why today’s jobs report was largely ignored: “it’s all about the forward outlook around tariffs and the ensuing impact on global demand. You would never have thought to see yields performing this way with a jobs report like this.”

Ed Al-Hussainy, rates strategist at Columbia Threadneedle Investment, says “the market is betting that recession risks and the tightening of financial conditions will force the Fed to cut aggressively” now up to 100bp this year and rising. 

As for Powell’s speech later this morning, Al-Hussainy says: “If we get any pushback against this from Powell & Co., front end rates may end up offside.”

But perhaps the best wrap of today’s jobs report, however, was from Omair Sharif,  Inflation Insights: “Someone forgot there was a recession coming.”

For a few hours it seemed like we could even stabilize, if only a bit, ahead of today’s scheduled main event: the March jobs report at 8:30am ET. And then all hell broke loose at 6:08am when this Bloomberg headline hit:

• *CHINA ANNOUNCES EXTRA 34% TARIFFS ON US GOODS

In other words, far from seeking concessions, Beijing is now looking to escalate the trade war further, and forcing Trump to double down with even harsher retaliatory tariffs on China of his own, which at this point may push the blended tariff rate on Chinese goods above 100%.

What followed instantly was sheer, unadulterated liquidation panic:

• *S&P 500 FUTURES DECLINE 4.1%, NASDAQ 100 FUTURES DOWN 4.6%
• *COPPER PLUNGES MORE THAN 5%, BIGGEST LOSS SINCE JULY 2022
• *US 2-YEAR YIELD FALLS TO 3.498%, LOWEST SINCE SEPTEMBER 2022
• *BRENT OIL DROPS BELOW $65 FOR FIRST TIME SINCE AUGUST 2021
• *US CREDIT RISK GAUGE JUMPS MOST SINCE REGIONAL BANKING CRISIS
• *STOXX EUROPE 600 INDEX FALLS 5.2%, MOST SINCE MARCH 2020

Instead of writing, we’ll let the charts do the talking, summarizing the bloodbath so far. The S&P is set to record losses on six of the past seven weeks.

Volatility has come roaring back as VIX explodes above 45. A continuation of the selloff on Friday — when the government’s jobs report for March is released — threatens to extend Fund managers yanked $4.7 billion out of US stocks in the week through April 2 in the second week of outflows, data compiled by EPFR Global and Bank of America show.

The post-liberation day market has been a historic bloodbath

Bitcoin reversed all modest overnight gains, but remains surprisingly resilient.

The dollar’s modest reversal higher was promptly halted, and the greenback reversed just as it was gaining.

It wasn’t just the dollar: the yuan also tumbled, reversing its bizarre gains since Trump declared trade war on China.

“The market is bleeding and more pain is clearly coming as this escalating trade war risks pushing the US economy into a recession,” Luca Paolini, chief strategist at Pictet Asset Management said over the phone. “It’s not a surprise China would retaliate. But this will inevitably cause a recession because the damage is done — unless Trump backs off.”

Well, there is an alternative: an emergency rate cut by the Fed, which now looks increasingly likely, because credit has officially cracked..

… but worse, the 3Y SOFR swap spread, a metric of Treasury market stress is the lowest on record.

Friday’s losses follow a massive wipe out by US stocks on Thursday that erased $2.7 trillion in value – the second biggest one day loss in history – in the wake of Trump’s drastic new trade tariffs which ignited widespread recession fears. 

In a few minutes, investors will get a look at the latest monthly jobs print — the first major piece of data for the quarter — which could have wide-ranging implications for bond, stock and currency markets as well as the Fed’s next moves. Jerome Powell is scheduled to deliver remarks at 11:25 a.m. in Arlington, Virginia, which will be parsed for signs of weakness spreading to the workforce.

The derivatives market is pricing in more volatility ahead. Options traders are betting that the S&P 500 will move roughly 1.6% in either direction after the jobs print today, based on the price of at-the-money straddles, according to Citigroup Inc. That’s well above the average straddle price for a 0.9% swing in either direction over the past 12 months. It’s also well below what the market has already swung!

“How bad will it get for the economy? With so much uncertainty swirling, stocks are selling off and that’s signaling that investors see both economic and profit growth slowing because of the trade war,” Adam Sarhan, founder of 50 Park Investments said by phone.

Bloomberg reports that the equity rout now has Wall Street’s biggest stock bull, Oppenheimer’s John Stoltzfus, rethinking his 7,100 price target on the S&P 500, which is among the highest on Wall Street tracked by Bloomberg and would imply a 25% gain through Thursday’s close. That comes as RBC Capital Markets’s Lori Calvasina cut her price target on the index for a second time this year to 5,550 from 6,200, given a dimmer outlook for economic and profit growth.

“Without a doubt, where we’re sitting here it is under review and has been under review for awhile,” John Stoltzfus said on Bloomberg Television Friday. “The reality has been until we got these rather surprising unpleasant levels of tariffs and the market’s reaction, we’re naturally going to have to take a look and sharpen our pencils, so to speak.”

Treasuries added to steep weekly gains unleashed by unfolding trade war, sending 2-year yields to lowest level since September 2022, after China retaliated against US tariffs with measures including a 34% levy on all American imports. Yields across maturities are lower by at least 11bp led by the 2-year, down nearly 19bp and below 3.5%. Fed-dated OIS contracts price in additional easing, with 115bp anticipated by year-end and about 50% odds of move in May. US session includes March jobs report and a speech by Fed Chair Powell at 11:25am New York time. US 10-year yield, around 3.89% near session low, is richer by 15bp on the day, more than 40bp on the week, and 100bps since January; bunds outperform by an additional 2bp in the sector while gilts trade broadly in line. Front-end-led gains — as more Fed easing is priced in — extend the steepening in 2s10s and 5s30s curves by nearly 3bp and 6bp on the day

More stuff is happening, but honestly it is meaningless to go over everything since prices are moving at a furious pace and everything will be stale as soon as we write about it, and certainly after the jobs report is published.

US economic calendar includes March jobs report at 8:30am. Fed speaker slate includes Chair Powell at 11:25am on the economic outlook, with text release and Q&A expected. Barr (12pm) and Waller (12:45pm) also speak

Market Snapshot

• S&P 500 mini -2.9%
• Nasdaq 100 mini -3.1%
• Russell 2000 mini -4.1%
• Stoxx Europe 600 -5%
• 10-year Treasury yield -12 basis points at 3.91%
• VIX +14 points at 44
• Bloomberg Dollar Index +0.2% at 1254.8, 
• Euro +0.1% at $1.1055
• WTI crude -4% at $64.15/barrel

Top Overnight News

• Trump administration officials are assuring farm-state Republicans they will funnel billions of taxpayer dollars to farmers who are hit by Trump’s intensifying trade war. But it may be some time before any money is released. The administration wants to take stock of the economic fallout of the tariffs in the agriculture sector before rolling out aid, which will likely take several more months. Politico
• While there have been expressions of displeasure, Republicans (who could use their own votes to stop the new tariffs cold) made clear they had no intention of acting anytime soon. “I think most members on our side are very willing to give the president time,” Arkansas Sen. John Boozman said, summing up the view of many GOP lawmakers who might have qualms about Trump’s massive new levies but showed little interest — at least for now and the near future — in doing anything concrete to restrain him. Politico
• President Donald Trump on Thursday contradicted his top aides on the purpose of his sprawling new global tariff regime, adding to the uncertainty over the trade war that has sent markets reeling. Earlier in the day, top Trump aide Peter Navarro and Commerce Secretary Howard Lutnick said the president was not looking to strike deals over the tariffs. “This is not a negotiation,” Navarro told CNBC. But after markets closed down sharply, Trump told reporters on Air Force One that he would be open to striking deals with individual countries. WaPo
• US Social Security faces thousands more job cuts. The Social Security Administration is drafting plans to begin layoffs of potentially thousands more employees as soon as next week: WaPo
• Republicans are weighing the creation of a new bracket for those earning $1 million or more to offset some of the costs of their tax bill, a stark departure from decades of GOP opposition to tax increases. BBG
• China retaliated against the new US tariffs, announcing a 34% levy on all American imports starting April 10. Earlier, Donald Trump said he’s open to negotiations if other nations can offer something “phenomenal.” BBG
• President Trump’s jumbo tariffs on China threaten to create a new problem for a global economy already stressed over trade: a $400 billion deluge of Chinese goods looking for new markets. WSJ
• Japanese PM Shigeru Ishiba will meet opposition leaders today to discuss responses to the tariffs, which he said should be called a “national crisis.” BOJ Governor Kazuo Ueda said the US’s move will weigh on growth. BBG
• Traders now see the Fed cutting 100 bps by year-end, with a 50% chance of a cut in May. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks resumed the post-Liberation Day selling after Wall St suffered its worst loss since 2020, while fresh drivers are light amid the Greater China holiday closures and with participants now awaiting US jobs data. ASX 200 re-entered correction territory with the declines led by heavy losses in tech and energy in which the latter was pressured after oil prices fell by around 7% amid tariff turmoil and news that OPEC+ decided to increase output by a larger-than-scheduled 411k barrels per day in May. Nikkei 225 sold off again and fell below the USD 34,000 level with better-than-expected Household Spending data doing little to spur a recovery. KOSPI was initially choppy but ultimately weakened after the Constitutional Court upheld President Yoon’s impeachment which sparked some angry protests and triggered an election to be held within 60 days.

Top Asian News

• BoJ Governor Ueda said US tariffs are likely to exert downward pressure on Japan and global economies, while he added it is hard to say now how US tariffs will affect Japan’s price moves and they will closely monitor US tariff impact on Japan, overseas economic and price developments in deciding monetary policy. Ueda said they will scrutinise data, including from hearings, available at the time of each policy meeting to gauge the US tariff impact on Japan’s economy and prices.
• BoJ Deputy Governor Uchida said they will raise interest rates if underlying inflation heightens against the background of continued improvements in the economy. Uchida said they will examine, without any preset idea if economic and price forecasts laid out in the quarterly report will be achieved, as well as scrutinise at each meeting economic, and price developments and risks including the impact from US tariffs.
• South Korean Constitutional Court ruled to oust impeached President Yoon with the decision made unanimously.

European bourses (STOXX 600 -2.1%) are entirely in the red, in a continuation of the Trump-tariff induced slump seen on Thursday. Price action has only really been downwards today, given the lack of fresh catalysts and with traders mindful of the key NFP report ahead. European sectors hold a strong negative bias, with only a couple of sectors managing to hold in positive territory. Food Beverage & Tobacco outperforms today, largely thanks to the defensive bias in the markets today. Banks continue to underperform, extending on the prior day’s losses; yields continue to drive lower, and fears of an economic slowdown continue to increase.

Top European News

• UK government said almost GBP 14bln of R&D funding is allocated to bolster life sciences, green energy, space and beyond to improve lives and grow the economy.
• Goldman Sachs cuts the UK’s 2025 GDP growth forecast to 0.7% (prev. 0.8%).
• Deutsche Bank says the latest US tariffs could hit Europe and the UK’s GDP by 0.4-0.7% percentage points and 0.3-0.6 percentage points respectively.

DXY

• DXY is on a firmer footing, after initially edging lower in overnight/early European trade. Yesterday was a woeful session for the USD on account of concerns over the US’ growth outlook post-tariffs with the DXY falling from an opening level at 103.37 to a trough at 101.26. Trade specific updates since have been relatively light, so focus today will be on US NFP and then Fed Chair Powell thereafter.
• EUR/USD has been weighed on in recent trade by the pickup in the USD but is still firmly above yesterday’s opening level @ 1.0848. Analysts at ING attribute the recent resilience in the EUR not to a positive reappraisal of the Eurozone’s growth outlook but more as a result of the “alternative liquidity offered by the euro”.
• JPY is marginally softer vs. the USD and faring better than peers on account of the JPY’s safe-haven appeal. BoJ speak overnight saw Governor Ueda remark that US tariffs are likely to exert downward pressure on Japan and global economies, however, it is hard to say now how US tariffs will affect Japan’s price moves. Elsewhere, Deputy Governor Uchida noted that rates will be raised if underlying inflation heightens against the background of continued improvements in the economy. USD/JPY has made its way back onto a 146 handle but is still far away from yesterday’s opening level at 149.21.
• After a solid showing vs. the USD yesterday which sent Cable from a 1.2968 base to a 1.3207 peak, the recent resurgence of the Dollar briefly sent the pair back onto a 1.29 handle with a session low at 1.2976.
• Antipodeans underperform today after seeing slight gains in the prior session. Gains yesterday were limited by the high-beta status of both currencies, which is the main driver of today’s underperformance as internal macro drivers for Australia and New Zealand remain light.

Fixed Income

• USTs continue to advance as the risk tone remains downbeat and has deteriorated further in the European morning. Bringing USTs to a 113-12+ peak, weighing on yields across the curve with the belly/10yr once again lagging. Trade updates have been relatively light since “Liberation Day”, but President Trump suggested that the onus is on partners to bring him something “phenomenal”. US NFP is on the docket and then focus turns to Fed Chair Powell thereafter.
• Bunds are already getting on for gains of 100 ticks on the day with Payrolls and Powell yet to print. Initial action was modest in nature, with overnight focus primarily on Japan as JGBs played catchup to Thursday’s moves and BoJ bets were altered to show just 13bps of tightening implied for the rest of 2025. Peaked at 130.75 thus far with gains of 163 ticks WTD.
• Gilts are also moving higher alongside peers. Upside of 104 ticks at most so far, higher by over 230 ticks on the week and around 350 above the low from last Wednesday’s Spring Statement.

Commodities

• Crude continues its recent slump with WTI and Brent currently down by around USD 2.60/bbl and USD 2.50/bbl respectively. There has been little fresh fundamental in today’s trade, but pressure is ultimately a factor of a) negative risk tone. b) fears of slowing economic growth. c) OPEC+ decided to increase output by a larger-than-scheduled 411k barrels per day in May. Brent Jun’25 currently at the lower end of a USD 67.53-70.11/bbl range.
• Precious metals are on the backfoot today, with spot silver underperforming vs gold. Specifically for the yellow-metal, price action was rangebound overnight and remained within overnight ranges for most of the European morning, before then succumbing to some modest selling pressure alongside a broader pick-up in the Dollar. Currently trading around USD 3,090/oz in a USD 3,078.60-3,116.67/oz range.
• Base metals are entirely in the red, given the risk tone and in a continuation of the recent slump across the commodity complex; a holiday in China, is also a factor for the downside today.

Geopolitics: Middle East

• Israeli military say they have “eliminated” Hassan Farhat, a Hamas commander in Lebanon
• Israeli media reported that the Israeli army launched raids on large areas in the Gaza Strip, according to Al Jazeera
• Houthi-affiliated media reports US aggression on the Kahlan area, east of Saada city, northern Yemen, according to Al Jazeera.
• Iran reportedly abandons Houthis under relentless US bombardment and ordered its military personnel to leave Yemen, according to The Telegraph.
• US President Trump said he spoke with Israeli PM Netanyahu on Thursday who may visit the US next week, although it was separately reported that Israeli PM Netanyahu’s visit to the White House will likely take place in a few weeks.
• Turkey said Israel’s attacks on regional countries have made Israel the biggest threat to regional security, while it added that Israel is a regional destabiliser and is feeding chaos and terror.
• Saudi Crown Prince received a phone call from Iran’s President during which they discussed developments in the region and issues of common interest.

Geopolitics: Ukraine

• US President Trump’s inner circle advises against a call with Russian President Putin until he commits to a full ceasefire.
• Russian envoy Dmitriev said lots of differences remain, but a diplomatic solution is possible and there is already some progress on trust-building measures, while he sees a positive dynamic in US-Russian relations and said Several meetings are needed to sort out differences. Dmitriev also stated that a long-term solution that takes into account Russian security concerns is what is needed, as well as commented that they are not asking for a lifting of sanctions and that they can do a deal with the US on rare earths.
• Moscow’s mayor said Russian air defences repelled drones approaching Moscow and specialists are examining fallen fragments.

US Event Calendar

• 8:30 am: Mar Change in Nonfarm Payrolls, est. 140k, prior 151k
• 8:30 am: Mar Change in Manufact. Payrolls, est. -1k, prior 10k
• 8:30 am: Mar Unemployment Rate, est. 4.1%, prior 4.1%
• 8:30 am: Mar Average Hourly Earnings MoM, est. 0.3%, prior 0.3%
• 8:30 am: Mar Average Hourly Earnings YoY, est. 4%, prior 4%

DB’s Jim Reid concludes the overnight wrap

The last 24 hours have been truly historic for markets, as the impact of the US reciprocal tariffs cascaded across different asset classes, with no sign of letting up overnight. We’ll dive into more depth shortly, but just to run through some of the moves, yesterday saw the S&P 500 fall -4.84%, marking its biggest daily decline since June 2020, with futures down another -0.74% this morning. In turn, that took the peak-to-trough decline for the S&P 500 beyond 12%, meaning it’s now the biggest overall decline since the 2022 bear market. Otherwise, US HY spreads widened by +53bps yesterday, the biggest move wider since March 2020 at the height of the pandemic turmoil. The 10yr Treasury yield has fallen beneath 4% again, with futures fully pricing in a Fed rate cut by the June meeting. Both the dollar index (-1.67%) and Brent crude oil (-6.42%) suffered their worst days since 2022. And overnight, the 10yr Japanese government bond yield (-16.8bps) is on track for its biggest decline since 2003. So we’re currently experiencing some of the biggest moves in years right across the major asset classes.

Given the significance of the tariff announcement, here at Deutsche Bank Research we’ve been thinking through what this means for our global forecasts. Yesterday we provided an initial guide (link here) on how they’ll shift if the tariffs do hold, although clearly there’s still a lot up in the air, including the extent of any retaliation. For the US, the movement is stagflationary, and our economists think these could reduce the 2025 GDP forecast (Q4/Q4) from 2.2% to around or under 1%, with core PCE up from 2.7% to around 4%. So recession risks will likely rise materially if these tariffs are sustained. And when it comes to the Fed, they think the latest moves make them more likely to cut, even though the direction of travel is highly stagflationary, with the bias now towards up to four cuts this year if this tariff policy holds.

Meanwhile in Europe, our economists’ discuss their latest estimates in a report yesterday (link here). They estimate that the increase in US tariffs could knock 0.4-0.7pp off EU GDP, and that the EU will likely retaliate. Although the tariffs could complicate the easing trajectory for the ECB, they think they’re likely to continue cutting, and hold their terminal rate forecast of 1.50% at end-2025, with further rate cuts in April, June, September and December. They think the hit to growth will increase pressure on the ECB to cut rates, especially as the euro moved above $1.11 intraday yesterday for the first time in over 6 months.

In terms of what happens now, the big question is how the US’s trading partners might retaliate, as that will play a huge role in determining what the overall economic and market impact will be. For instance, French President Macron said yesterday that companies should pause their US investments, saying “What would be the message of having big European players that invest billions in the American economy at the same time they are hitting us”. Separately, it was announced by Canadian PM Market Carney that Canada would put 25% tariffs on US-made autos that don’t comply with the USMCA deal. At the same time, investors will be watchful of any potential deals to reduce tariffs, with Trump saying yesterday evening that “The tariffs give us great power to negotiate” but that other countries would have to offer something “phenomenal” in negotiations for him to relent. So no signs of any immediate relief.

On the back of all this, investors grew increasingly fearful about a potential US recession, with US equities seeing their sharpest decline in years. The S&P 500 (-4.84%) , the NASDAQ (-5.97%) and the small cap Russell 2000 (-6.59%) all saw their worst days since 2020, and there were as many as 74 companies in the S&P that fell by at least 10% yesterday. All that meant measures of volatility continued to spike, with the VIX index (+8.51pts) moving up to 30.02pts, its highest level since the turmoil last summer. And given mounting fears of a downturn, the more cyclical sectors drove the underperformance, with the Magnificent 7 (-6.67%) posting its worst day since July and extending the decline from its December peak to -24%. Meanwhile in Europe, the declines weren’t quite as bad, but even there the STOXX 600 (-2.57%) saw its biggest move lower since August.

Whilst growth fears were at the forefront yesterday, investors were also becoming a lot more concerned about inflation. In fact, the US 1yr inflation swap (+8.3bps) rose for a ninth session in a row to close at its highest level since 2022, back when the Fed were still hiking by 75bps per meeting to get inflation under control again. However, because of the growth fears, investors also priced in that the Fed would cut rates more aggressively over the months ahead. In fact as we go to press this morning, futures are now pricing over 100bps of rate cuts by the December meeting, and are fully pricing in an initial cut by the June meeting. They even see a 34% probability of a cut at the next meeting in May, so all eyes will be on Fed Chair Powell’s comments today to see his reaction.

With investors worried about the growth shock and pricing in more rate cuts, that helped sovereign bond yields to move lower across the curve, albeit with a very sharp steepening. For instance, the 2y Treasury yield (-17.8bps) fell back to 3.68%, and the 10yr yield (-10.1bps) fell to 4.03%, yet the 30yr yield (-3.0bps) saw a smaller decline to 4.47%. And over in Europe, there were also declines as investors priced in more ECB rate cuts, with yields on 10yr bunds (-7.0bps), OATs (-5.0bps) and BTPs (-4.3bps) all moving lower.

Over in the FX space, there was a huge depreciation in the US Dollar yesterday, with the dollar index (-1.67%) posting its biggest daily decline since 2022. That included a +1.83% move for the Euro, which closed at $1.1052, which is the first time it’s closed above $1.10 in six months. More broadly, our FX strategists are maintaining their bullish EUR/USD view, and George Saravelos warned yesterday (link here) that there’s an increasing concern that the dollar is at risk of a broader confidence crisis.

Amidst the huge market moves, sentiment wasn’t helped by the latest ISM services data, which came in beneath expectations in March. The headline index was down to a 9-month low of 50.8 (vs. 52.9 expected), and the employment component (46.2) slumped to its lowest since December 2023. That said, for now at least, the labour market hasn’t shown an obvious sign of deterioration, with the weekly initial jobless claims at 219k over the week ending March 29 (vs. 225k expected), which pushed the 4-week average down to 223k.

That focus on US data will continue today, as we’ve got the March jobs report coming out at 13:30 London time. Clearly it won’t account for the full impact of these reciprocal tariffs that are now coming, but it will be an important test as it’s one of the first hard data prints we have for the month of March. In terms of what to expect, our US economists are looking for nonfarm payrolls to come in at +150k, with the unemployment rate rounding up to 4.2%. You can see their full preview and register for their post-release webinar here. Later on today, we’ll then hear from Fed Chair Powell, who’s giving a speech on the economic outlook, so that will be heavily in focus to hear about how the Fed are thinking about tariffs and their reaction function. Ahead of that, we did hear from Fed Vice Chair Jefferson yesterday, who said “there is no need to be in a hurry to make further policy rate adjustments.

Overnight, this direction of travel has continued in markets, with sharp losses in Asia that built on yesterday’s moves. For instance, Japan’s Nikkei is down another -3.74%, on top of its -2.77% move yesterday. So as it stands, the index is down -9.93% for the week, which would be its worst weekly performance since the pandemic turmoil of March 2020. That comes amidst a sharp appreciation in the Japanese yen, which is currently at 145.62 per US dollar this morning. 

Moreover, there’s been an astonishing move in Japan’s government bond yields, with the 10yr yield (-16.8bps) on track for its biggest daily decline since 2003. Meanwhile in Australia, the S&P/ASX 200 (-2.24%) has also built on its Thursday losses, leaving it on track for its worst weekly performance since 2022. And in South Korea, the KOSPI is down -1.71%. Equity markets in China are closed for a holiday.

To the day ahead now, and the main highlight will be the US jobs report for March. Other data includes German factory orders and French industrial production for February, along with the construction PMIs for March in Germany and the UK. Elsewhere, central bank speakers include Fed Chair Powell, along with the Fed’s Barr and Waller.

Our conversation with a few institutional desks suggests a growing interest in the downstream economic impact of DOGE-related federal agency restructurings across Washington, DC—particularly with USAID neutered, the Department of Education dismantled, and numerous other agencies experiencing tens of thousands of job cuts. Additionally, the termination of federal contractors and NGO staff raises further concerns that the nation’s capital—fueled mainly by taxpayer dollars—could face outsized economic disruption.

Goldman Chief Economist Jan Hatzius shared new insights with clients on Sunday, unveiling an economic snapshot of the DC metro area economy through the firm’s new Monthly U.S. Government Activity—a data dashboard that monitors DC government employment, spending, and other economic trends.

Hatzius said the first two months of the second Trump administration had featured federal agency restructuring, spending cuts, and federal layoffs, prompting his team to launch the monthly U.S. Government Activity Tracker to monitor employment and spending trends.

Jobs data so far indicates early signs of reduction in the government workforce, with 49.3k employees (1.6% of the workforce) affected. This includes 21k probationary workers, along with further cuts planned at agencies like the VA, DoD, IRS, and HHS. Initial unemployment claims for federal workers rose in late February (read here) and early March but have since moderated, while DC job postings on Indeed.com are down 11% since January. Hatzius noted that the broader labor market impact remains minimal.

Federal spending shows some confirmed cuts, particularly at the State Department and FCC, though total cash withdrawals from the Treasury align with historical norms. Contract awards have fallen slightly, while grant awards have stagnated below trend since Inauguration Day. Government travel has also slowed, but DC airport traffic remains stable, while DC Metrorail ridership surged as federal workers were called back to the office. 

Data from Morning Consult shows consumer sentiment among federal workers has soured, especially across the DC metro area since the start of the year. 

Here’s the U.S. Government Activity Tracker snapshot for March: 

Employment

Reduction in Force Orders Have Affected an Estimated 49.3k Federal Employees So Far

Initial Unemployment Claims Filed by Federal Employees Remain Elevated

Further RIF Layoffs Have Been Reported at the Department of Veterans Affairs, Department of Defense, and Internal Revenue Service

Job Openings in Washington DC Have Declined Considerably

Federal Government Job Growth Slowed to 0.7% Year-over-year in February

Spending

Total Federal Government Operating Cash Withdrawals Are Roughly On-trend…

But Spending is Undershooting in Several Key Department and Agencies

Federal Contracts Activity Declined Slightly in February but Still Lies Within Normal Ranges

Federal Grants Have Largely Stagnated at a Below-trend Level Since Inauguration Day

Government Travel

Recent Company Anecdotes Highlight Negative Impacts on the Airlines and Hospitality Sectors

No Signs of Decline in DC-Area Flights

Weekday Metrorail Ridership Reaches a Post-pandemic High as Federal Employees Return to Office

Consumer Sentiment

Sentiment Among Government Employees Has Declined Sharply, Especially Among Those Residing in the DC Area

Market Performance of Companies Exposed to Government Spending Cuts Has Declined Since Election Day

Some IT Software, Defense, and Real Estate Companies Are Cautiously Optimistic About the Efficiency-driven Spending Cuts

Hatzius pointed out, “Taken together, the data captures a modest real-time impact on employment and discretionary and operational spending but otherwise suggests limited growth implications. We continue to expect these government spending cuts to have a relatively limited macroeconomic impact.” 

Separate from Goldman, we have commented on everything from MLS housing data to jobs data, which only show that the real pain for the DC Swamp—whether in DC itself, Northern Virginia, or Maryland—has yet to hit.

U.S. equity futures took another leg lower, the VIX spiked to 36, Treasury yields slipped (UST10Y <4%), crypto tumbled, and the dollar reversed its European session gains—just after 06:00 ET—when China hit back at President Trump's "Liberation Day" tariff blitz.

Beijing retaliates:

China to impose additional 34% tariffs on **all** imported U.S. products starting April 10, the official Xinhua news agency reports.

— Javier Blas (@JavierBlas) April 4, 2025

According to state-run Xinhua, Beijing announced it would slap 34% retaliatory tariffs on all U.S. imports starting April 10. Details were scarce at the moment. 

“Chinese authorities said they will start a probe into medical CT X-ray tubes imported from the US and India, and halt imports of poultry products from two American companies,” Bloomberg noted. 

Xinhua also reported that Beijing announced export control measures on certain rare earth-related items but did not provide specifics.

China announces export control measures on certain rare earth-related items pic.twitter.com/HBW2ahcjv1

— China Xinhua News (@XHNews) April 4, 2025

The move comes two days after Trump’s tariff-a-palooza pushed the effective U.S. tariff rate on Chinese goods to 54%.

Deutsche Bank’s George Saravelos noted on Thursday that the big negative surprise this week has been the 50%+ tariff rate on China (far worse than expectations) and the key connector economy Vietnam, which affected $600bn worth of manufactured goods to the U.S. combined.

Goldman helped clients visualize this move. 

On Thursday, Beijing condemned the escalating tariff war, calling it “unilateral bullying. ” It added that it “firmly opposes” the tariff war and “will resolutely take countermeasures to safeguard its own rights and interests.”

And here we are—risk assets getting hammered again on a Friday morning—as tensions between Washington and Beijing escalate sharply to end the week. Both superpowers remain locked in a stalemate over China’s subsidization of fentanyl precursor chemicals to Mexico, which has fueled the overdose death crisis in the United States. 

Stay on top of the tariff war:

• The Only Chart That Matters… Global Impact Of Trump Tariffs Will Be Determined By Beijing

• “Reign Of Tariffs” Begins: All You Need To Know About Trump’s “Reciprocal” Trade War

• Beijing Slams Trump’s “Unilateral Bullying” Tariffs, Signals Retaliatory Action

In markets, main US equity futures indexes were hammered lower after China retaliated. 

A lot more red. 

UST10Y <4%.

Implied interest rate cuts top 4.5 for the year. 

Bitcoin tumbles.

Dollar loses steam after European surge. 

And Yuan weaker.

*Developing…