Trade Relief

Ian Reynolds May 4, 2025

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Overnight

Economic Indicators Released Friday

Nonfarm Payroll caught markets off-guard, coming in stronger than expected but with wage components lower than expected, it all ended up being positive for stock markets as recession fears were assuaged.

Australian and European CPI ticked up slightly but all eyes were on the US NFP report anyway

Global Equities

Breaking

China Says It’s Assessing US Talks, Hinting at Possible Thaw [Bloomberg]

US Bessent: Need to see de-escalation with China on tariffs [ForexLive]

China Quietly Exempts About a Quarter of US Imports from Tariffs [Bloomberg]

Japan’s Kato Says US Treasury Holdings Could Be Negotiation Card [Bloomberg]

OPEC+ agrees another accelerated oil output hike for June [Bloomberg]

trump tweet

Trump threatens bombing if Iran does not make nuclear deal [Reuters]

Trade Relief

Markets breathed a sigh of relief as China appeared to relax it's stance on tariffs, and signalling that, at least, there would be some talking.

Stock markets jumped, Gold fell and the Hong Kong Dollar, Taiwan Dollar and Chinese Offshore Yuan spiked.

OK so great but there's plenty of other things going on. Trump threatening countries with sanctions for buying Iranian oil is in fact a big stick with China, who buy a significant amount of their oil from Iran.

Precious Metals / Commodities

Gold has retraced $300 from the all time high and the monthly chart below shows this is a good thing for Gold speculators as it's a pause and a better level to get back into the trade.

GOLD / USD Daily

Oil confirmed below support this week and had 3 consecutive down 3% days until Trump's Iran sanctions was announced. A short-covering rally didn't change the strong downward forces, which will be reinforced with OPEC policy for more production in June.

SPOT BRENT Monthly

Bitcoin (& Crypto)

Bitcoin continues to deleverage from other risk assets and we're expecting the 4 year cycle to play out in the next few months.

BITCOIN/ USD Daily

Britain to ban consumers borrowing to buy cryptocurrencies [FT]

United States

US Economic Indicators

A week of polar economic news which started with negative GDP and ended with positive NFP. The inflation indicators were, overall, as expected but those employment numbers just won't break, disappointing an army of recession hungry pundits.

In reality it's too early for the tariff-induced downturn to reflect in the numbers and the NFP headline will be revised down which they always seem to be. March headline was revised down 40,000.

McDonald's suffers worst U.S. sales decline since 2020, warns of 'anti-American sentiment' abroad [NBC News]

U.S. Chamber of Commerce asks Trump for tariff exclusions to 'stave off a recession' [CNBC]

Texas trucking company, brokerage file for Chapter 11 bankruptcy [Yahoo! Finance]

USD seems to have found a bottom for now and could help stabilise treasuries, the long end really needs it.

DXY Daily

The 10 year is really struggling to rally and that yield keeps reverting back to >4.30. No matter what tricks Bessent pulls out of his bag, being banged up against the debt ceiling whilst not being able to pay pension obligations, will keep this story running until a resolution appears.

US 10 Year Government Bond Yield Daily

China

China Economic Indicators

Some stability in the forward looking indicators, but a really cloudy economic picture. The offshore Yuan closed ay 7.21 and the onshore Yuan at 7.27.

Hong Kong Buys Record Amount of US Dollars to Defend Peg [Bloomberg]

Taiwan Dollar Soars Most Since 1988 on Bets Trade War Will Ease [Bloomberg]

A strong currency is exactly what China doesn't want going into trade negotiations (if they do).

USD / OFFSHORE YUAN Daily

Japan

Japan Economic Indicators

Slower growth and inflation predicted by the BoJ as they held rates.

Japan now finds itself between many rocks and hard places. With the markets fully in control of monetary policy, Japan now has to come to an agreement with Trump yet not upset Beijing, from where a good proportion of imports originate.

Equally they agreed with China and South Korea, to fight Trump on a regional basis.

Outlook for Economic Activity and Prices (April 2025) [Bank of Japan]

Europe

EU Economic Indicators

Nothing from the EU this week, just as they really need to get their act together. Germany seems to be going off the rails politically as democracy seems to be in doubt with the potential banning of political parties. Many in Europe will be aghast at this. Is history repeating?

German economy contracts for second consecutive year in 2024 [Reuters]

EU trade chief says bloc could settle dispute by buying €50b in U.S. goods [investing.com]

United Kingdom

UK Economic Indicators

The UK public have voted but there is no chance of Starmer listening to his own electorate and we'll have to wait until 2029 for the next general election, unless there is some type of popular revolt.

However the next financial revolution is upon us and the UK is best equipped to lead the world in this. The government has published draft legislation to bring firms offering services in crypto assets such as Bitcoin and Ethereum into a clear regulatory perimeter, aiming to boost investor confidence and protect consumers.

‘Apocalyptic’: Tory wipeout as Nigel Farage storms English councils [FT]

Nigel Farage’s Reform UK hammers Tories and Labour in local election rout [FT]

The end of the cable trade as a shooting star forms on the daily. USD at low of long term trend suggests USD weakness over for now.

GBP / USD Daily

Canada

Canada Economic Indicators

With national unity a hot topic, new PM Mark Carney pulls out the machine gun, inviting King Charles to attend the opening of parliament. Australia take note, when the chips are down the power remains where it's always been.

Carney explains rare step of asking Charles to open parliament [BBC]

In Canada's Alberta, national unity is on the ballot [BBC]