logo
Trump reveals his pain threshold, backs down on tariffs: IFR

Trump reveals his pain threshold, backs down on tariffs: IFR

Zawya10-04-2025

So the Trump put does exist and we have a measure for the US president's pain threshold. The latter lies somewhere around the S&P 500 sliding 15% in less than one week, the dollar turning lower, and Treasuries starting to wear the weakness elsewhere.
We know this because the US backed away from its trade war, Trump announcing on his Truth Social platform a 90-day PAUSE on its tariffs programme for most countries, being those which have not retaliated so far, basically leaving China as the odd one out. Reciprocal tariffs have also been lowered to 10% over this period.
Granted there does seem to be some confusion here (!!!) given the baseline tariffs were established at 10% with the reciprocal tariffs being announced as targeted and increased additional measures last week, so President Trump does appear to have mixed up the names of his own programmes.
Regardless, one can fret that this is only a pause, and what will remain for Europe considering the reversal is specific for countries which have not retaliated against the shift toward a more hostile US trade policy, whilst Europe has in fact announced a targeted, albeit delayed, response of its own.
Leave that for another day because the S&P 500 soared 9.5% on the news, and who cares if S&Ps have slipped back more than 30 points or 0.7% through Asian trading?
Global bourses have followed suit; Eurostoxx50 futures are up 7.5%, and the Nikkei is up more than 8%, although the CSI300 is showing more moderate gains of 1.2%.
Treasuries are also finding relief, 10-year futures up ¾ point from their settle, but up a more slight 1/5 point from when Europe went home.
Bunds in contrast are getting smacked, down 120 ticks from their settle, although some allowance should be made for Treasuries getting hit after Europe's close by Trump's tariff reversal.
Long-dated JGBs meanwhile have had another wild ride, 30-year yields ranging from 2.58% to 2.81%, but the high fell just short of Wednesday's high and the market is ending slightly lower on the day around 2.67%.
For all this good news, however, the dollar is slipping again, the index dipping to DXY102.57. The yen is stronger, at USD/JPY146.65, and so are the euro and the pound, at EUR/USD1.0991 and GBP/USD1.2865.
Gold is also bouncing, up to $3,115.69, flirting with last Friday's highs, while oil is easing back after Wednesday's big bullish engulfing, Brent crude down $0.76 at $64.72.
Today
Can we pretend it's all over and the last month or so was just a bad dream?
To a greater extent, for the near term, we probably can. Riskier assets can continue to stabilise, and global markets can become more orderly again.
But such chaotic policy making will not be completely forgotten, and nor will the desire to completely shift the paradigm for international trade as well as to dismiss if not walk all over historical alliances.
If global markets were already losing liquidity amid so much volatility, then this aspect of trading is likely to get a little bit worse still today given the proximity of the US CPI report tomorrow. Heaven forbid a stronger print comes out (Reuters consensus +0.1% m/m and +2.6% y/y, +0.3% m/m and +3.0% y/y for core), which may be seen as restraining the Fed's choices and highlighting the stagflation theme.
BNP Paribas meanwhile in its CPI Preview published on Tuesday afternoon wrote that it expects: 'April CPI as the first potential data to reveal impacts from the administration's auto and broader reciprocal tariffs.'
Granted, Trump's reversal should prompt some relief here and potentially make the data somewhat outdated; why worry about tariff-driven inflation if the tariff threat has been reduced and delayed?
Yet decision makers, whether on a personal or a business level, will have already been framing their minds with respect to expectations for inflation, and this is to say nothing of what is likely to prove a greater and more lasting hit to confidence.
Back to today, however, and a bit of supply does feature as Spain will tap €5.5bn–€6.5bn of its 5/29, 10/32, and 4/35 bonds. Also, it will presumably be worth keeping in mind that Italy will proceed with its mid-month auctions Friday morning, when it taps €7.25bn–€9.0bn BTPs out to the 3/38 maturity.
Both auctions are at risk from bidders not wanting to participate amid so much global volatility. There are those – especially primary dealers – who have to participate, but they can be assumed to be wanting to run shorts into the auction process, and use the incoming paper to cover their positions, to the extent they may want to lighten their shorts.
Indeed, consider the 'super-competitive' nature of the larger government markets in Europe, where dealers are having to chase client business in the secondary market and also chase auctions to keep their dealership going. Away from this, with respect to Spain at least, bidding is expected to come largely from Spanish accounts, although the non-competitive option is viewed as 'super attractive' for fast money amid so much volatility.
Otherwise, the Spanish taps should go well amid reinvestment needs even if we aren't particularly close to month-end; in this respect, note the auctions have been pushed forward a week (and come on the heels of last Thursday's taps) in respect of Holy Thursday next week. Also helping are the chance to take down blocks of paper in a single showing (as auctions present a 'liquidity event'), and interest in taking Spain as a proxy for less liquid markets like Portugal.
Cheaper valuations may also of course attract interest, but this is something of a double-edged sword given the cheaper valuations result from all the global volatility referenced above.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Why ‘King of Cattle' is embracing a plan to save the Amazon
Why ‘King of Cattle' is embracing a plan to save the Amazon

Gulf Today

time2 hours ago

  • Gulf Today

Why ‘King of Cattle' is embracing a plan to save the Amazon

Manuela Andreoni and Ana Mano, Reuters Decades of ranching in the Amazon have earned Roque Quagliato, Brazil's "King of Cattle," great wealth — and some trouble. His family's immense farms were accused of submitting workers to slavery-like conditions in the 1990s and deforesting huge tracts of the rainforest in the early 2000's. But as Brazil's beef industry evolves under pressure from some of the world's greatest export markets, Quagliato, at 85, is now in evidence for something else: he is the face of the push to fix cattle ranching in the Amazon, one of the world's biggest drivers of deforestation. Quagliato's cattle were the first to be tagged with chips in their ears as part of a government program to make millions of cattle in the Amazonian state of Para traceable around the time world leaders arrive there for the United Nations climate summit in November. "What we hope is that, at the end, the international market gives Brazil a better price," he said at the sidelines of a recent cattle auction in Xinguara, one of the beef capitals of Para. Deforesters, he added, are now "a matter for jail." Quagliato has his eyes on exporting pricier and more demanding markets in the United States, Europe and Asia, some of which buy from Brazilian states but not Para at least partly because of concerns around animal health and links to deforestation. "Brazil is hustling to open high-demand markets such as Japan and South Korea, and improving its traceability system is one of the key steps to reaching that goal," said Renan Araujo, a senior market analyst at S&P Global. Para, which has a herd of 26 million, about the size of Australia's, wants to tag all its cattle by 2027 as it seizes on the global spotlight to become a test for a wider policy and a major shift for the world's largest beef exporter. So far, it's off to an inauspicious start. The law, passed in late 2023, requires that ranchers in Para identify their cattle by the end of 2026. But by May ranchers in the state of Para had only tagged some 12,000 cattle. But the buy-in of big ranchers, like Quagliato, has allayed concerns that "there was going to be wholesale rejection" of the policy, said Andy Jarvis, who directs the program Future of Food at the Bezos Earth Fund, which donated $16.3 million to Para's project. "The success of this initiative needs the farmers and ranchers themselves to be supporting it." The ambitious move, if successful, could be a turning point in the struggle to halt the destruction of the world's largest rainforest. Environmentalists have long argued that improvements in cattle traceability would give law enforcement a powerful tool to choke off ranching in illegally deforested farms from the global supply chains relying on Brazil to feed growing global appetite for beef. While the state's proposal to track cattle individually is no silver bullet against deforestation, it would be a step forward that many thought unimaginable not so long ago. Many ranchers are resisting the program, which they think will take some of them out of business, and few believe the government will meet its goals for this year. But several big-time farmers interviewed by Reuters are throwing weight behind the policy. "There is a cost," Quagliato said. But when ranchers sit down to talk about it, he added, they simply conclude that "we have to do it." The Quagliato family still faces questions over their own impact on the forest and its people. Brazil's federal environmental protection agency said Quagliato paid all his deforestation fines, except for one which he settled, agreeing to regenerate the forest. One of his family members was recently convicted of submitting workers to slave-like labor conditions, though he is appealing. Quagliato declined to comment on these cases. Tagging each cow in Para isn't simply a tool to guarantee animals aren't eating grass where forests were illegally razed. More than anything, it allows animal health agencies to quickly track any sick cattle and their contacts. Data suggests the market rewards traceable herds. The average price of the beef Brazil exports is 8% lower than Uruguay's, which traces cattle individually, according to 2024 data from the Brazilian Beef Exporters Association. That's partly because Uruguay sells much of its beef to the European Union, which has long worked to rid its supply chains of ties to deforestation and requires individual traceability at least 90 days before cattle are slaughtered. Most big ranchers interviewed by Reuters see cattle tagging as an unavoidable path forward, though some fear Para is moving too fast for farmers to adapt and would like the policy to be watered down. Quagliato declined to say how big his herd is or how many of his cattle he had tagged. Local publications have estimated his herd size to be around 150,000 cattle. Ranchers told Reuters they are waiting to comply until the legal deadline comes closer, because they want to make sure it won't be delayed as many observers expect. Some also complained about technical glitches in the system to register cattle, which the government denies. Still, the project has gained support from both the meat packing industry and environmental groups. São Paulo-based JBS, the world's biggest meat packer, has donated 300,000 tags to the program so far. "I'm optimistic," said Marina Guyot, a policy manager at Imaflora, a nonprofit that received a grant from Bezos to help implement the policy. "At the moment, we have political will, which is more than half the way there." 'IT SCARES US' Alaion Lacerda's 50-strong cattle herd at the heart of Para state munch on grass alongside cocoa growing beneath the shade of native trees he planted. He is one of thousands of small producers at the bottom of Brazil's supply chain, providing young calves that bigger ranchers will fatten and sell to slaughterhouses. But, like about half the cattle in Para, his herd is grazing in areas where the rainforest was illegally razed, and he now wonders if the new law will make it harder for him to sell his cattle. "It scares us," he said, sitting on his porch. "We live in a region where almost all producers have a liability." Every day satellites collect visual data on deforestation that the government and meat packers use to mark farms where forests were illegally razed. But tagging will allow officials to geo-locate cattle with a swiping device. The tool could make it harder for farmers to say cattle that were reared in illegally deforested areas came from legal farms, said Ricardo Negrini, a federal prosecutor who monitors links to deforestation in the beef supply. But the program, he added, "still falls short in terms of environmental standards," partly because the tags only geolocate animals at specific moments, allowing ample time for bad-faith producers to move cattle without being noticed. "Whatever you want to control, you can't catch everything," said Raul Protazio Romao, the head of Para's environmental department. "You have to progressively implement control mechanisms that constantly evolve and close gaps." Lincoln Bueno, a big rancher whose family also controls beef exporter Mercurio, said he is not yet tracing his cattle because he fears he may be punished for buying from small suppliers who have illegally deforested plots in their land. "I can only do what I am able to comply with," he said. Convincing ranchers like Bueno and Lacerda to tag their cattle is Para's biggest challenge. It's why the government now allows farmers who have illegally cleared forest on their ranches in the past to clear their records by committing to allowing the forest to grow back. On a recent morning, agricultural analysts from a nonprofit called Solidaridad, visited several small ranchers who they hoped would enter the program. Some were open to the idea that cleaning up their records would have benefits. Others, like Lacerda, were more skeptical. "For me to reforest, isolate the area so I can be legal, I'm going to have to reduce the number of animals," he said. But that, he added, "will affect my income."

Dubai court rejects mother's plea  seeking partition of villa she co-owns with her son
Dubai court rejects mother's plea  seeking partition of villa she co-owns with her son

Gulf Today

time2 hours ago

  • Gulf Today

Dubai court rejects mother's plea seeking partition of villa she co-owns with her son

Dubai Real Estate Court dismissed a lawsuit filed by an Asian woman seeking to cancel the co-ownership of a villa in Dubai between herself and her son, as each owns a 50% share. The court ruled that the villa, designated for single-family occupancy, cannot be divided into two equal portions. According to case details, the plaintiff stated that she intended to transfer her share of the property to her other son to ensure fairness and equality among her children. When she asked the property developer to obtain a No Objection Certificate (NOC) for the sale and transfer process, the developer refused to issue the certificate due to the absence and non-cooperation of her son, who is a co-owner of the property. Case documents revealed that the plaintiff had previously filed a lawsuit before the Dubai Personal Status Court but the court ruled it lacked jurisdiction, prompting her to file the case before the Real Estate Court, requesting either the allocation of her share or the partition of the property to enable her to sell her portion to her other son. The court appointed a specialised expert to determine the feasibility of partitioning. The legal representative of the son argued for the dismissal of the case, citing the impossibility of division since the villa is designed for single-family occupancy and cannot be separated. The expert's report affirmed that the villa consists of a ground floor and a first floor, currently occupied by a tenant, and is designated for single-family use, making it impossible to divide into two equal shares. The expert also assessed the villa's market value at Dhs5.25 million, based on official data from the Dubai Land Department. Dr Alaa Nasr, the legal representative of the appellee, explained that the court's rejection of the plaintiff's claims was based on the provisions of the Civil Transactions Law, which stipulates that the jointly owned property must be divisible and the expert's report conclusively established the impossibility of fairly dividing the property.

Blackstone to invest $500bln in Europe over next decade, Bloomberg reports
Blackstone to invest $500bln in Europe over next decade, Bloomberg reports

Zawya

time3 hours ago

  • Zawya

Blackstone to invest $500bln in Europe over next decade, Bloomberg reports

Blackstone plans to invest up to $500 billion in Europe over the next decade, CEO Steve Schwarzman told Bloomberg Television in an interview on Tuesday, underscoring market confidence in the region's prospects. Schwarzman said Europe represents a "major opportunity" for the world's largest alternative asset manager, which oversees assets worth over $1 trillion. There has been a surge in investor optimism about the region, driven by European governments' push to increase military spending and revive a sluggish private equity market. With U.S. President Donald Trump reshaping global alliances and trade policies, Europe is actively pursuing new avenues for economic growth, potentially creating promising investment opportunities for firms such as Blackstone. The European Union, for example, is ramping up its defense spending to revitalize a sector historically overlooked by private investors. Since 2020, the U.S. and Canada have attracted 83% of all private equity and venture capital-backed aerospace and defense investment, according to S&P. Europe is starting to change its approach, "which we think will result in higher growth rates. So this has worked out amazingly well for us," Schwarzman told Bloomberg. Schwarzman supported Trump in the U.S. presidential election last year, according to a report from Axios. He has long been viewed as an ally of the president. Trump's whiplash tariffs have, however, prompted several businesses to optimize their supply chains to reduce U.S. exposure. "The U.S. administration's tariffs - combined with any retaliatory measures from its trading partners - will deliver a supply shock to the U.S. and a demand shock to the rest of the world, including China and Europe," said Blerina Uruçi, chief U.S. economist at T. Rowe Price. ($1 = 0.8753 euros)

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store