Stock market rally continues / Lagarde: ECB has not made up its mind on rates / Bessent: Trump’s tariff rates could be restored by July / Yellen: One rate cut possible this year / Today:Fed Beige Book
Good morning,
I hope all is well.
Here are the main market movers and overnight stories:
Markets Briefing: MSCI World index extends its rally to a 9th session
The MSCI All Country World Index extended its rally to a 9th session, the longest streak since September, with China's CSI 300 erasing all Iran-war losses to join Taiwan, Singapore and Wall Street, and the S&P 500 closing in on its January record after Tuesday's +1.18% to 6,967. The catalyst was Tuesday's huge US PPI dovish surprise — headline +0.5% vs +1.1% consensus, core +0.1% vs +0.4% — despite gasoline +15.7% and jet fuel +30.7% from the Iran energy shock, with services unchanged. Trump told Fox News the war is "close to ending" and a second round of US-Iran talks may resume in Pakistan within two days, even as the US pressed ahead with the Strait of Hormuz naval blockade. KOSPI +3.01% leads the Asian session; oil stays sub-$100 (WTI +0.19% at $91.45, Brent +0.36% at $95.45), dollar little changed after 7 days of losses; US 10Y essentially flat at 4.25%; JGB 10Y -2bp to 2.399%.
Main Overnight News
ECB has not made up its mind on rates, Lagarde says
The European Central Bank has not made up its mind on whether to raise interest rates, as the fallout from the Iran war on the euro zone's economy remains unclear, ECB President Christine Lagarde said on Bloomberg TV on Tuesday. Investors have been speculating on ECB rate hikes as soon as this month as the closure of the Strait of Hormuz pushes up fuel prices in the energy-importing euro zone, threatening to trigger another surge in inflation. But Lagarde said it was still too early to draw conclusions and appeared to rein in colleagues who have ventured predictions about possible rate increases. (RTRS – Continue Reading)
Trsy's Bessent: Trump’s tariff rates could be restored by July
President Donald Trump’s tariffs may be restored by July to the levels in place before the Supreme Court struck down many of his levies, Treasury Secretary Scott Bessent said. “We had a setback at the Supreme Court in terms of the tariff policy, but we will be implementing or conducting Section 301 studies, so the tariffs could be back in place at the previous level by beginning of July,” Bessent said Tuesday at a Wall Street Journal event in Washington. (BBG – Continue Reading)
Meanwhile, the Trump administration is expected to begin accepting claims for refunds of tariffs President Trump illegally collected next week. In an order on Tuesday, Judge Richard Eaton of the Manhattan-based Court of International Trade said the government confirmed in a closed conference earlier that day that it is on track to begin processing refund claims with interest on April 20 for some importers. (WSJ)
Former US Treasury Secretary and Fed Chair Yellen says one Fed rate cut possible this year
Former U.S. Treasury Secretary Janet Yellen sees one interest rate cut by the Federal Reserve as possible this year, even as the Iran war creates supply shocks in the global economy that put pressure on inflation. "Short-term inflation expectations are up slightly, but they're going to watch all of that very carefully, and I think they have an open mind," Yellen said on Wednesday at the HSBC Global Investment Summit in Hong Kong. "If I had to write one thing down on a piece of paper, if I'm going into the next FOMC meeting where the forecasts are produced, I suppose my guess would be that maybe there would be a cut later in the year." (RTRS)
Currently, markets are pricing in a 40% chance of a Fed rate cut by year's end, according to the CME Fed Watch tool.
Treasury Secretary Bessent softened his stance on rate cuts, saying he understands if the Fed wants to wait for clarity on the impact of the Iran war before easing. Chicago Fed President Goolsbee warned that rate cuts may need to be pushed into 2027 if elevated oil prices keep inflation above target.
US-Iran conflict summary
The US has begun enforcing its naval blockade of Iran, turning tankers back and reporting that no ships passed through in the first 24 hours. Separately, the US hosted rare Israel-Lebanon talks, though Israel hailed the meeting despite slim chances for a breakthrough. The economic fallout from the Iran conflict is drawing increasing attention: the G-24 group urged the IMF to adapt its rules as energy costs rise, while the IMF warned of slowing growth and rising inflation. In the UK, the Chancellor is set to meet her US counterpart following criticism of the war.
Today’s Macro Roadmap: Central bank speak / US Empire mfg. survey & NAHB / Fed’s Beige Book
Wednesday is dominated by senior central bank speakers across the IMF Spring Meetings in Washington DC — including ECB Lagarde (21:30 CET), Schnabel, Cipollone ×2, Rehn, plus BoE Governor Bailey ×2, Fed Barr and Bowman, and SNB Schlegel. Key data is EZ Industrial Production Feb (11:00 CET) and the US Empire State Manufacturing Apr (14:30 CET). The Fed will also release its Beige Book (20:00 CET).
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