Newsquawk US Market Wrap: Stocks mixed, Treasuries slide as Trump piles pressure on 'slow' Powell

MARKET WRAP

US indices ended the final trading session of the holiday-shortened week mixed (SPX, RUT up, DJIA down, NDX flat) as they were sold into the close, albeit with no headline driver, in a day with a deluge of risk-leading headlines, with sentiment buoyed on US President Trump being very confident on reaching trade deal with EU, and will make a very good deal with China. Trump continued to reiterate his distaste for Fed Chair Powell and accused him of being slow to cut rates. Underscoring this, a WSJ piece noted that Trump has spoken with former Fed Governor Kevin Warsh about succeeding Powell, but Warsh advised against firing the current Fed Chair. Fed speak was light, with only the influential NY Fed's Williams speaking, and he largely toed Powell's line from Wednesday. On the data docket, initial claims, for the week that coincides with the NFP survey window, unexpectedly fell, an encouraging sign that employment remains stable in the face of fresh tariff announcements from Trump. In addition, housing data was mixed, but the Philly Fed was dismal, and fell into negative territory. Sectors are largely in the green, with only Communication Services, Tech and Healthcare in the red, with the latter weighed on by UnitedHealth (UNH) (-22.5%), which cut guidance. Energy and Consumer Staples are the outperformers, as the former is buoyed by upside in energy prices; the crude complex saw notable gains, and was further aided in wake of WSJ reporting that US is considering cuts of nearly USD 10bln in clean-energy funding. The Dollar is more-or-less flat, with Antipodeans outperforming and buoyed by risk sentiment while safe-haven FX (JPY, CHF) lag. Treasuries are lower with greatest weakness seen in the long-end. In terms of other to know on Thursday, ECB cut rates, as expected, accompanied by dovish commentary while TSMC issued a stellar report.

US

NY FED PRESIDENT WILLIAMS largely echoed Fed Chair Powell. He said the economy is in a very good place amid uncertainty and monetary policy is well positioned, and that he does not see a need to change rates any time soon, via an interview on Fox Business. Williams noted it is hard to say what the Fed will do with rate policy, but his basic views on monetary policy have not fundamentally changed and that the Fed needs to ensure a one time change in prices (i.e. tariffs) do not affect the longer run. On tariffs, Williams said they will drive up inflation this year and lower growth, stressing now is the time to collect data and understand what is going on, noting how it is unclear how long it persists. Williams said it is key to watch how trade policies affect inflation, and it is important to watch inflation expectations right now. He said recent inflation data has been good news, but still above target. On the outlook, the FOMC Vice-Chair said market pricing reflects uncertainty about the outlook, and he will not make a prediction about a recession. He said growth this year is likely significantly slower and unemployment is up. He reiterated his forecasts made recently that growth this year will likely slow to below 1%, with the jobless rate rising to 4.5-5.0%. Williams noted the longer run FFR is likely around 3%, in line with the Fed median dot plot, adding the neutral rate is still likely low.

JOBLESS CLAIMS: Initial Claims, for the week that coincides with the NFP survey window, fell to 215k from 224k, beneath the 225k forecast, an encouraging sign that employment remains stable in the face of fresh tariff announcements from US President Trump. The drop in initial claims resulted in the 4wk average declining to 220.75k from 223.25k. The continued claims, for the preceding week, rose to 1.885mln from 1.844mln, above the 1.872mln forecast. Regarding the unadjusted data, initial claims rose by 3k to 220k, with seasonal factors expecting a 12.3k increase. The continued claims fell 34.5k unadjusted, with seasonal factors expecting a decrease of 77.4k. The low initial claims data shows to Oxford Economics that the labour market remains resilient. The consultancy said, "With layoffs remaining low, the Federal Reserve will focus on the inflation side of its mandate, which is why we expect policy to remain on extended pause, with the next rate cut not coming until December."

PHILLY FED: The April Manufacturing Business Outlook Survey tumbled to -26.4 from 12.5, well beneath the forecast of 2.0, seeing the lowest reading since 2023. It noted nearly 39% of firms reported decreases in general activity, while 13% reported increases, with 41% reporting no change. The drop was largely led by tumbling New Orders, which fell to -34.2 from +8.7, the lowest reading since April 2020. Shipments also disappointed, falling 11 points to -9.1. Regarding employment that registered a near zero reading, suggesting steady employment conditions. Price indices continue to suggest overall price increases, while looking ahead the future activity indicators continue to suggest subdued expectations for growth over the next six months. The outlook did however rise to 6.9 from 5.6 in March. Note, survey responses were collected from April 7-14th, either side of US President Trump's April 9th announcement regarding the hike on China tariffs, but also the 90-day pause, giving other nations a tariff of just 10%.

BUILDING PERMITS/HOUSING STARTS: Building permits rose 1.6% in March to 1.482mln, but -0.2% Y/Y. Single family authorisations fell 2% to 978k. Housing starts tumbled 11.4% M/M to 1.324mln, but rose 1.9% Y/Y. Single family starts drove the decrease in starts, falling 14.2% to 940k. As is usual with this data, the room for revisions is quite large. Pantheon Macroeconomics highlights that "Very cold weather in January likely pushed some starts into February, potentially explaining some of the subsequent fall in March". Regarding completions, privately owned housing completions fell 2.1% from February to 1.549mln. Pantheon concluded that "a significant decline in new residential construction projects looks likely to add to the broader headwinds facing the economy over the next quarter or two."

FED SCHMID (2025 voter) said there is a lot of nervousness in the agricultural sector from tariffs, and added that he’s an optimist and needs to be patient to see how it plays out. Kansas City Fed President said they will react to disruptions that might affect mandates.

FIXED INCOME

T-NOTE FUTURES (M5) SETTLED 8 TICKS LOWER AT 111-05+

At settlement, 2s +1.4bps at 3.800%, 3s +1.4bps at 3.800%, 5s +3.3bps at 3.942%, 7s +4.7bps at 4.125%, 10s +5.2bps at 4.331%, 20s +6.0bps at 4.841%, 30s +6.3bps at 4.810%.

INFLATION BREAKEVENS: 5yr BEI +6.8bps at 2.326%, 10yr BEI +5.2bps at 2.234%, 30yr BEI +4.7bps at 2.204%

THE DAY: T-Notes gradually sold off overnight as equity futures caught a bid, in an apparent reversal of what was seen post-Fed Chair Powell on Wednesday. T-Notes hit lows of 111-02+ in the European morning, before turning higher, with the timing syncing up with a post from US President Trump calling for Powell to lower rates, adding "Powell's termination cannot come fast enough!" in response to the Fed Chair's wait-and-see approach on Wednesday. However, at the same time, Dow futures were plummeting in wake of dismal UnitedHealth (UNH) earnings report (UNH) were the largest weighted Dow stock, which heavily hit the index, perhaps supporting some haven demand. T-Notes continued to push higher after the US data, seemingly driven by the very downbeat Philly Fed survey. Although the jobless claims data showed the labour market remains robust with the Initial Claims data falling. T-Notes failed to test the overnight highs but sold off in the wake of a soft 5YR TIPS auction. T-Notes did move off the post-auction lows after Trump said he is confident on a trade deal with the EU, and that trade is moving along very well, noting how they will make a good deal with China. On central banks, NY Fed President Williams spoke, but largely echoed Fed Chair Powell. Meanwhile, the ECB cut rates by 25bps and were dovish about the outlook. Attention next week turns to Flash S&P Global PMI data and 2-,5-, and 7-year supply.

SUPPLY:

The US Treasury sold USD 25bln of 5yr TIPS at a high yield of 1.702%, tailing the when issued by 2.2bps. The B/C of 2.28x was better than the prior 2.1x but not as strong as six auction average. Meanwhile, the breakdown of demand saw direct demand at 17.8%, falling from the prior 23.1% but a touch above the six-auction average. Indirect demand rose to 64.2% from 51.4%, but demand was softer than recent averages. This left dealers with 18.1% of the auction, well above the 7.58% six-auction average but below the prior 25%. Overall, a soft auction but better than the December offering.The US Treasury sold USD 85bln of 4-wk bills at a high rate of 4.240%, B/C 2.91x; sold USD 75bln of 8-wk bills at a high rate of 4.235%, B/C 2.94x.

US Treasury to sell:

STIRS/OPERATIONS:

CRUDE

WTI (K5) SETTLED USD 2.21 HIGHER AT 64.68/BBL; BRENT (M5) SETTLED USD 2.11 HIGHER AT 67.96/BBL

The crude complex saw notable gains on Friday, and ended the week in firmer territory where price action has been largely driven by macro flows/sentiment, rather than energy specific newsflow. Nonetheless, WTI and Brent extended on gains seen on Wednesday after the US issued fresh Iran-related sanctions targeting oil tankers. Moreover, WTI and Brent saw gains as EU players left for the day, and extended to session highs, after WSJ reported that US is considering cuts of nearly USD 10bln in clean-energy funding. Separately, Treasury Secretary Bessent stated that the Trump administration has made it clear that they will apply maximum pressure on Iran and disrupt the regime’s oil supply chain and exports. Furthermore, NYT reported that Trump waved off a planned Israeli strike on Iranian nuclear sites in favour of negotiating a deal with Iran to limit its nuclear programme. In the weekly Baker Hughes rig count, oil rigs rose 1 to 481, natgas also rose by 1 to 98, leaving the total up 2 to 585. For the record, WTI and Brent hit weekly lows of USD 60.44/bbl and 63.79/bbl, respectively, against peaks of 64.86 and 68.14.

EQUITIES

CLOSES: SPX +0.15% at 5,284, NDX +0.00% at 18,258, DJI -1.33% at 39,142, RUT +0.97% at 1,882.

SECTORS: Energy +2.24%, Consumer Staples +2.18%, Real Estate +1.62%, Utilities +1.03%, Materials +0.67%, Industrials +0.57%, Consumer Discretionary +0.38%, Financials +0.28%, Communication Services -0.13%, Health -0.64%, Technology -0.68%.

EUROPEAN CLOSES: DAX: -0.53% at 21,203, FTSE 100: -0.04% at 8,272, CAC 40: -0.60% at 7,286, Euro Stoxx 50: -0.58% at 4,938, AEX: -0.16% at 852, IBEX 35: -0.17% at 12,914, FTSE MIB: -0.28% at 35,967, SMI: +0.73% at 11,647, PSI: -0.15% at 6,736.

EARNINGS

STOCK SPECIFICS

FX

The Dollar Index was modestly firmer on Thursday as markets continued to digest Fed Chair Powell's speech on Wednesday, which put a dent in dovish expectations gained from Waller's remarks on Monday. Upside in the afternoon was supported by US President Trump's remarks, noting he is very confident on a trade deal with the EU, adding he will make a very good deal with China. On the data footing, the buck saw little reaction, with modest upside in T-Notes seen on the releases. Initial Claims fell, Continued Claims jumped higher, and the Philly Fed Business Index sank into negative territory as a heavy contraction in New Orders weighed. Looking ahead, markets are closed for Good Friday, with little US data due next week (Durable Goods on Thu, UoM Final on Fri). As such, trade developments will remain the key risk events to be watched.

G10 FX was mixed, with NZD seeing strong gains following hotter-than-expected Q1 CPI while CHF underperformed, but remains within recent trading day ranges. At Rabobank, they expect some profit-taking in long CHF positions this quarter, expecting "the value of the CHF to remain firm given the heightened degree of uncertainty in the market." Separately, GBP was marginally firmer, AUD saw decent strength amid a surprise downtick in the March unemployment rate, and JPY lagged amid higher US yields on the long end ahead of Japanese CPI in APAC trade. Overnight, BoJ's Governor Ueda noted the economy and prices are moving roughly in line with our forecasts; he added, markets had been stable when they raised rates in January. Meanwhile, both US President Trump and Treasury Secretary Bessent indicated that US/Japan trade talks are going well, although Japan PM Ishiba warned talks will not be easy going forward. The G10 calendar for the upcoming week is set to be quiet, with UK & Canada retail sales due.

EUR/USD was choppy following the ECB's decision to cut interest rates by 25bps as expected. The statement saw the prior language around restrictiveness removed, while ECB sources, via Reuters, noted the decision was unanimous and some ECB governors already see a high chance of a June cut. As it stands, money markets see ~ 75% chance of a 25bps rate cut at the June meeting. Click here for the Newsquawk ECB review. ING retained a tactical target of 1.15 in EUR/USD with risks of even larger gains. They note expect by the end of the quarter, "selling pressure on USD to have moderated, and we target 1.14, followed by a dollar recovery in the third quarter".

TRY: In CEE, the CBRT surprised markets, hiking the Weekly Repo Rate to 46% (exp. a hold at 42.5%), the Overnight Lending Rate to 49% (prev. 46%), and the Overnight Borrowing Rate to 44.5% (prev. 41%); TRY saw modest strength on the decision. Following the hike, JPM revised their year-end forecast for the policy rate to 38% (prev. 35%) while Goldman Sachs expects cuts to resume in July unless there are new shocks.

17 Apr 2025 - 21:06- Fixed IncomeData- Source: Newsquawk

Federal ReserveTrumpDXYBrentUnited StatesOilECBInflationUNHDoveConsumer Price IndexTariffPBoCDataChinaCentral Bank WeeklyWeekly US Earnings EstimatesJapanTSMCFixed IncomeEuropeFTSE 100 IndexBoJEquitiesEnphase Energy IncGoogle IncS&P 500 IndexBuilding PermitsEUR/USDNASDAQ 100 IndexGovernorUnitedHealth Group IncStaples IncMonetary PolicyDHI.USAXP.USNDAQ.USENPH.USNVDA.USHTZ.USUS Market WrapUNH.USSCHW.USGOOGL.USLLY.USBX.USUnited KingdomAEX 25 IndexItalyBoCRBAVZTSLABAIBMPEPMRKPGINTCDow Jones Industrial AverageFOMCT-NoteCentral BankPurchasing Manager IndexYieldIsraelBaker Hughes IncDAX 40 IndexEURO STOXX 50BXDR Horton IncDHIAmerican Express CoAXPCharles Schwab Corp/TheSCHWEli Lilly & CoLLYNVDANDAQELVENPHNatural GasGOOGLAdvertisingDowntickUnemployment RateRetail SalesJPMGoldman Sachs Group Inc/TheJPYIranCHFResearch SheetUS SessionHighlightedHighlightedResearch SheetUS SessionGeopoliticalCanadaNZDAgricultureGBPAUD

Subscribe Now to Newsquawk

Click here for a 1 week free trial

Newsquawk provides audio news and commentary for over 15,000professional traders and brokers worldwide. Services include: