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• Prior was 98.3 (revised to 100.1)
• Present Situation Index 134.5 vs. 136.5 prior
• Expectations Index 65.2 vs 72.9 prior
• 12-month inflation expectations 6.2% vs 5.8% prior

This is a better indicator than the UMich survey but I think most of the market is at the point where they want to see signs of softening in the hard data rather than this.

That said, this is the fourth straight month of declines and goes back to January 2021, when the pandemic was still biting hard.

This is a better indicator than the UMich survey but I think most of the market is at the point where they want to see signs of softening in the hard data rather than this.

That said, this is the fourth straight month of declines and goes back to January 2021, when the pandemic was still biting hard.

“Consumer confidence declined for a fourth consecutive month in March,
falling below the relatively narrow range that had prevailed since
2022,” said Stephanie Guichard, Senior Economist, Global Indicators at
The Conference Board. “Of the Index’s five components, only consumers’
assessment of present labor market conditions improved, albeit slightly.
Views of current business conditions weakened to close to neutral.
Consumers’ expectations were especially gloomy, with pessimism about
future business conditions deepening and confidence about future
employment prospects falling to a 12-year low. Meanwhile, consumers’
optimism about future income—which had held up quite strongly in the
past few months—largely vanished, suggesting worries about the economy
and labor market have started to spread into consumers’ assessments of
their personal situations.”

This article was written by Adam Button at www.forexlive.com.

• Services index -4 vs +11 last month
• Manufacturing shipments -7 vs +12 last month

Other details:

• Employment -1 vs 9 last month
• Wages 19 vs 21 last month
• Prices paid 3.75 vs 2.23 last month
• Prices received 2.34 vs 1.62 last month
• New orders -4 vs 0 last month
• Backlog of orders -1 vs -6 last month
• Capacity utilization -11 vs -6 last month
• Capital expenditures -7 vs -1 last month
• Services expenditure -18 vs -6 last month
• Finished goods inventories 3 vs 5 last month
• Raw materials inventory 8 vs 17 last month
• Equipment and software spending -1 vs 1 last month

This article was written by Giuseppe Dellamotta at www.forexlive.com.

April 2 is creeping closer and the headlines are dizzying. We started off the week with big pickup in risk assets after a pair of reports saying that Trump was going to leave a few countries off the tariff list.

Today though, the FT reports that Trump is considering a two-step approach that would start with emergency powers and then shift to Section 338 tariffs. People familiar say autos could use a previous national security investigation. Finally, one approach could use Section 122 that would allow tariffs of 15% for up to 150 days.

Another part is using tariffs to raise revenues for tax cuts. That would need to be encoded into law but it would likely require congressional help.

Through all of it, no one really knows what to expect.

Goldman Sachs highlight the more-benign view on tariffs this week. Don’t be fooled, they write: It could be a negative surprise as Trump imposes them from a high level for a negotiating tool, and will likely want to start from a position of strength.

A recent Goldman survey of market participants estimates reciprocal tariffs in April will amount to a 9% reciprocal tariff rate but Goldman itself expects that the initial tariff rate could be double that, which would set the market up for a negative surprise.

I think that’s a flimsy metric but there isn’t much to go on right now and I think it’s an important benchmark to set.

This article was written by Adam Button at www.forexlive.com.

This news is giving Bitcoin and Ethereum a boost although it’s now entirely fresh. The cryptocurrency is already live on the Ethereum and Binance blockchains,
which are decentralized databases that track the flow of digital assets.

This is probably giving cryptocurrencies a boost since it’s now announcing it publicly although I don’t see why it should matter that much. Fortune.com reported yesterday evening that Changpeng Zhao, the former CEO of the crypto exchange Binance posted a link to the token to his more than 10 million followers on X.

The social media account for World Liberty Financial then implicitly
acknowledged the link’s legitimacy saying “USD1 is not currently tradable.
Beware of scams and follow us here for all official announcements”.

Here you can find the full article

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prices +0.5% m/m vs -0.1% prior
• Prior was +0.5% m/m
• Non-seasonally adjusted -0.1% vs -0.1% prior
• Prices y/y +4.7% vs +4.8% expected
• Prior y/y +4.5%

Separate data on house prices from the FHFA:

• Prices m/m +0.2% vs +0.4% prior
• Prices y/y +4.8% vs +4.7% prior3

“Home price growth continued to moderate in January, reflecting a clear two-part story across the past
year,” says Nicholas Godec at
S&P Dow Jones Indices. “The National Composite Index posted a 4.1% annual gain, with the bulk of
appreciation—4.8%—occurring in the first half of the year. Prices declined 0.7% in the second half, as
high mortgage rates and affordability constraints weighed on buyer demand and market activity.

“Among the 20 metro areas tracked by the Composite 20, New York City led annual gains with a 7.7%
rise, followed closely by Chicago (7.5%) and Boston (6.5%). Tampa was the only market to post a year-
over-year decline, falling 1.5%. However, the second half of the year told a different story: San
Francisco posted the largest six-month decline at 3.4%, followed by Tampa at 3.2%. Only four of the 20
cities managed to eke out price increases during this period—New York, Chicago, Phoenix, and
Boston—highlighting broad-based cooling.”

This article was written by Adam Button at www.forexlive.com.

This is the lowest reading since May 2020

• General activity index: -17.5 vs -12.9 prior
• New orders index: -19.5 vs -1.3 prior — lowest since April 2023
• Full-time employment index: -7.5 vs 2.5 prior
• Prices paid index: 36.0 vs 23.4 prior
• Regional activity index: -32.5 vs -13.1 prior

The six month index fell to -19.8 from +13.8 in the first negative reading since April 2020.

Firms are becoming more cautious with spending:

• 30% expect lower total capital spending in 2025 vs. 2024
• 25% plan higher spending
• 45% anticipate unchanged spending levels

This article was written by Adam Button at www.forexlive.com.

• Trump is considering a two-step tariff regime on April 2 – FT
• ECB’s Vujcic: April meeting is completely open, more data is needed
• The Citi US Economic Surprise Index is climbing back into positive territory
• Koala-fied for a Rally – Aussie Dollar Climbs on Pre-Election Tax Cuts
• ECB’s Kažimír: We are open to discuss a rate cut or pause in April
• Russia says content of talks with US will not be disclosed in public
• Germany March Ifo business climate index 86.7 vs 86.7 expected
• Traders shrink bets on Fed rate cuts following the US PMIs
• Australia brings out new tax cuts in latest federal budget announcement
• What are the main events for today?
• US-Russia talks said to be not simple but useful
• Japan PMI Ishiba reportedly to introduce strong measures to counter rising prices
• BOJ governor Ueda: Still need some time to consider what to do with ETF holdings
• FX option expiries for 25 March 10am New York cut

The big news in the European session was the Australia’s center-left government unveiling an unexpected tax cut and an extension of energy rebates in the pre-election budget
in what looks like an attempt to shore up political support and help
secure Prime Minister Anthony Albanese a second term in office.

The Australian Dollar and Australian Bond Yields got a boost from the
news as it could make the RBA’s job of bringing inflation sustainably
back to target and lower interest rates harder.

The other noteworthy news was the FT report saying that Trump is considering a two-step tariff regime on April 2 using rarely invoked emergency powers to impose immediate tariffs while conducting formal investigations into trading partners. The market largely ignored this piece of news though.

Looking ahead, we have the US Consumer Confidence report coming up where better than expected (or not bad as feared) data could further boost the market sentiment.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Trump’s Two-Step Tariff Plan

• Emergency Tariffs First: Trump is considering using rarely invoked emergency powers to impose immediate tariffs while conducting formal investigations into trading partners.

• Legal Framework: His team is exploring Section 301 investigations, the International Emergency Economic Powers Act, and Section 338 of the 1930 Tariff Act to implement tariffs of up to 50% on certain imports.

• Potential Car Tariffs: Trump may impose tariffs on vehicle imports as early as April 2, using a previous national security study on the global car industry.

• Alternative Short-Term Option: Section 122 of the Trade Act of 1974 could allow temporary tariffs capped at 15% for 150 days, but this option seems unlikely.

Purpose & Revenue Focus

• While Trump frames tariffs as a response to unfair trade practices, his officials are primarily focused on using them to generate revenue for tax cuts rather than for trade negotiations.

• The administration is racing to find a legal basis that allows tariffs to be applied swiftly and broadly.

International Response & Concessions

• Foreign governments are scrambling to secure exemptions before the April 2 deadline.

• The UK is considering reducing taxes on US tech companies to appease Washington.

• EU trade commissioner Maroš Šefčovič is set to meet with Lutnick and Greer for last-minute negotiations.

Next Steps

• Trump plans to officially announce tariffs on April 2, calling it “Liberation Day.”

• Any tariffs introduced will be an evolution of his universal tariff plan from his first presidential campaign.

Click here for the full article

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The TSLA stock has been surging higher in the past few days on a mix of positive news which have been lifting the broad US stock market.

• The US data has started to surprise to the upside recently alleviating growth fears.
• Over the weekend and on Monday we got some positive news on tariffs with WSJ reporting that the US is narrowing its approach to April 2 tariffs set and President Trump saying that not all of his threatened levies would be imposed on April 2 and some countries
  may get breaks.
• JP Morgan reported that retail traders poured $8.1 billion into Tesla stock over 13
  straight trading days. That’s the biggest
  retail buying streak by dollar amount in more than ten years.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• April meeting is completely open, more data is needed.

He’s not saying anything new here as ECB members continue to keep the door for another rate cut open in light of the upcoming Trump’s “Liberation Day” on April 2nd.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The Citi US Economic Surprise Index is a widely followed indicator that measures how recent economic data compares to consensus expectations.

How It Works

• The index rises when economic data releases (such as GDP, employment reports, inflation, or retail sales) exceed expectations.

• It falls when data disappoints relative to forecasts.

• A positive reading means that, on average, economic data has been coming in better than expected, while a negative reading indicates worse-than-expected data.

Why It Matters

The markets move the most on surprises as they trigger a readjustment in future expectations and as all good traders know, the change in expectations is what drives prices.

Where Are We Now?

The index has been on a steady decline since mid-January as Trump launched his tariffs war and weighed on economic sentiment bringing high uncertainty. More recently, the index started to climb and it’s now almost back into positive territory as we can see from the chart below (h/t @lisaabramowicz1 on X).

The better than expected data also helped to alleviate the growth fears and led to a rebound in the US stock market and a contraction in the credit spreads. Growth expectations is the main determinant of credit spreads which also influences stock market returns as eventually it all comes down to future earnings growth.

Credit spreads refer to the difference in yields between corporate bonds and risk-free U.S. Treasuries of the same maturity. They reflect the additional risk investors demand for holding corporate debt.

What Happens When Credit Spreads Widen?

• A widening spread means corporate bond yields are rising relative to Treasuries, signaling that investors see greater default risk.

• This often happens when economic uncertainty grows, making it more expensive for companies to borrow.

• It can indicate a slowdown, weaker corporate profits, and potential recession risks.

What About Contraction?

• If credit spreads narrow, it suggests improving economic confidence, as investors demand less premium for riskier debt.

Below you can see the correlation between the S&P 500 (blue) and the US credit spreads (red)

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The Australia’s center-left government unveiled an unexpected tax cut and an extension of energy rebates in the pre-election budget in what looks like an attempt to shore up political support and help secure Prime Minister Anthony Albanese a second term in office.

The Australian Dollar and Australian Bond Yields got a boost from the news as it could make the RBA’s job of bringing inflation sustainably back to target and lower interest rates harder.

As a reminder, the RBA cut
interest rates by 25 bps as expected at the last meeting bringing the Cash Rate
to 4.10% but it was accompanied by a more hawkish than expected guidance. We
got a weak Australian Employment report last week which weighed on the AUD although it
didn’t change the market’s pricing much as the focus remains on more inflation
progress.

Tomorrow we have the monthly Australian CPI data where an upside surprise could further boost the AUD.

This article was written by Giuseppe Dellamotta at www.forexlive.com.