Ian Reynolds
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Overnight
US PPI March 2025
US PPI lower than expected cemented the CPI print but this was already in the market. And consumer sentiment falls further.
US equities rose to end a wild week on a slightly positive note.
World Equity Markets
Breaking
China Caps Tariffs on US at 125%, Calls Trump Levies a ‘Joke’ [Bloomberg]
Trump is waiting for Xi to call. The Chinese see it differently [CNN]
If the Trump administration is the beginning of financial probity then, so far, it's an abject failure.
Halfway through fiscal year 2025, the U.S. Budget deficit increased by $1.3 trillion. So we are up to a $2.6 trillion annual rate. That rounds up to an incredible 9% of GDP. Jeffrey Gundlach [X]
What is Money Worth?
Whatever you think of Trump's trade wars, you can be sure that a bigger question is being asked.
Every currency in the entire world is Fiat.
"The term "fiat" is a Latin word that's often translated as "it shall be" or "let it be done." Fiat currencies only have value because the government maintains that value. There's no utility to fiat money in itself." Investopedia
The purchasing power all of fiat currencies is tending to zero, as governments print it out of nothing. So who cares about the relative value of fiat currency pairs apart from foreign exchange traders. You'd think governments but actually they don't care. The people that have to care about currency rates is you and me, and everyone else.
The price of Amazon stock is very real to those that own or short the stock, but everyone else doesn't care. The opposite is true for currencies. They affect everything we buy, or goods or services we sell.
For 50 years governments have told us that the USD and US government bonds were the place to go to in times of trouble.
This week that changed. This week they were the trouble and Gold was the place to go to.
Firstly the US 10 year yield rose to the point at which Primary Dealers have told the treasury that they won't be able to cope with the selling pressure. The "risk-free' benchmark becoming unwanted.
Later the USD collapsed sending currencies in all directions.
No doubt this is the start of a long story, one in which maybe the US empire fails and the world rebuilds itself into a better and fairer place. But that's for a different conversation.
Forget the numbers, look at the volatility! Was there the beginning of yield curve control at 4.5%? Certainly Trump was forced to back down in the tariff wars.
US 10 Year Government Bond Yield Daily
Precious Metals / Commodities
As currencies go haywire, Gold is the clear winner, now threatening to go parabolic. Huge demand for physical bullion and record futures volumes show us exactly, in the case below, that the purchasing power of the USD has lost 33% in just one year.
GOLD / USD Daily
The inevitable global recession has repriced oil and it's not pretty. The monthly chart below shows the breakdown and clear air down to the low $20s
Bitcoin (& Crypto)
BTC breaks above the downtrend line and is poised to take a run at 94,000 and then the all time high. Any liquidity injection by central banks, especially China, will see it rip much, much higher.
BITCOIN / USD Daily
CRE / Banks / CLOs
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I'll be honest, it's nice to have some blue skies among all the charts. US (and other) commercial real estate is a bargain picker's dream at the moment. Smash-ups like this doesn't come too often in a lifetime.
United States
US Economic Indicators
It's all about lower inflation, failed bond auctions and fiscal rescues this week in the US.
The USD has now hit it's second lower target after the head and shoulders breakdown. Maybe more of the same.....
DXY Daily
US recognizes Panama's sovereignty over canal, Panama says after talks [Reuters]
China
China Economic Indicators
Regulators buying equities behind the scenes and lowering of the Yuan peg tells the story of the trade war, but economically China is staggering from a worse to an even worse situation.
USD / OFFSHORE YUAN Daily
Japan
Japan Economic Indicators
The trade wars will end talk of rate hikes and expectation of inflation is falling with diminished GDP.
Here's another head and shoulders breakdown happening in real-time. We're looking for 120.00 on the downside, will will trigger a whole load of problems for the MoF / BoJ.
USD / YEN Daily
Japan's bankruptcy filings hit 11-year high in FY2024/25, TSR tally shows [Reuters]
Europe
EU Economic Indicators
It's taken a trade war and global recession talk to wake Europe up. A pivot towards China is a definite possibility. Despite all the bullying talk out of the US, govt and commentators, Europe is a huge sleeping monster, it's GDP dwarfing the US and China. The trouble is that it's only a political framework.
But it has to be said that only the EU has been enforcing spending limits on it's governments. How sweet that must finally be for Brussels.
And a secular 15 year decline of the EURO, since the GFC, is now potentially being reversed.
EUR / USD Monthly
European markets functioning well, ECB attentive to FX movements, Lagarde says [Reuters]
United Kingdom
UK Economic Indicators
Still things looking better economically in the UK. If you're still in the cable position like we are, then you've done well. It didn't confirm below the uptrend channel so it was a bear trap!. Nice..
GBP / USD Daily
Canada
Canada Economic Indicators
Not much to report economically but as the USD went lower, the Loonie went with it. Very bearish price action. Tariff news should confirm one way or another but untradeable at the moment
USD / CAD Daily
Australia
Australia Economic Indicators
A screaming over-reaction as the head and shoulders neckline broke, hitting the target in one session. Then an almost 100% retracement. If it doesn't confirm above the neckline it may be the chance to short that we didn't think we'd get.
AUD / USD Daily
Australia turns down China's offer to 'join hands' to fight US tariffs [Reuters]
Revealed: RBA’s scathing warning it has ‘lost confidence’ in ASX [AFR]
What's Next ?
With the Easter long weekend i'd say governments and central banks will keep quiet this week so markets can settle.
Bank of Canada and ECB monetary policy meetings and we think there will be no change. They will remember when the FED cut 100bps, long rates went up 100bps. And they can't afford that to happen.
Not one word about equities today but they'll be back. We may get a pause but nothing's changed.
This Week's Important Economic Indicators [London time]
![This Week's Important Economic Indicators [London time]](https://vip.suberia.capital/hs-fs/hubfs/13042025/indicators.jpg?width=658&height=450&name=indicators.jpg)
