Stocks and the dollar tumbled after President Trump renewed criticism against Fed Chair Powell - Newsquawk Asia-Pac Market Open

US stocks tumbled and the Treasury curve steepened in response to further pressure from US President Trump on Fed Chair Powell to lower interest rates, while it remains to be seen if the President can fire Powell and NEC Director Hassett suggested Trump is studying ways on how to do this. As such, the fears of killing Fed independence from the government sparked the risk-off session and the front end of the curve saw yields fall on the potential for earlier rate cuts, although the longer end of the curve saw yields rise as cutting rates too early could boost inflation.
USD weakened alongside the broader risk-off sentiment with the DXY firmly beneath the 99.00 level as appeal continued to drift away from Dollar-denominated assets amid economic uncertainty around tariffs and the future of Fed Chair Powell, while tier-1 data was non-existent and newsflow was light on Monday with markets in the UK and Europe shut. Nonetheless, President Trump continued to ramp up his criticism against Powell and called for him to lower rates, while the latest rhetoric from Fed's Goolsbee provided very little new information.
Looking ahead, Highlights include New Zealand Trade Data, BoJ Core CPI, Supply from Japan.

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LOOKING AHEAD

Highlights include New Zealand Trade Data, BoJ Core CPI, Supply from Japan.
Click for the Newsquawk Week Ahead.

US TRADE

US stocks tumbled and the Treasury curve steepened in response to further pressure from US President Trump on Fed Chair Powell to lower interest rates, while it remains to be seen if the President can fire Powell and NEC Director Hassett suggested Trump is studying ways on how to do this. As such, the fears of killing Fed independence from the government sparked the risk-off session and the front end of the curve saw yields fall on the potential for earlier rate cuts, although the longer end of the curve saw yields rise as cutting rates too early could boost inflation.
SPX -2.36% at 5,158, NDX -2.46% at 17,808, DJI -2.48% at 38,170, RUT -2.06% at 1,842.
Click here for a detailed summary.

TARIFFS/TRADE

US President Trump said tariff negotiations are going well and they going to make a lot of money, while he touted cars and steel tariffs. Furthermore, he responded "we'll end up having a deal" when asked about the EU.
Mexican President Sheinbaum didn't reach a final agreement in a call with US President Trump, while Sheinbaum talked about steel, aluminium, and cars with Trump last week.
Japanese negotiators are reportedly complaining that the problem with the trade negotiations with the White House is that the US keeps changing its ask in terms of what exactly it wants, according to FBN's Gasparino.
US VP Vance's office issued a statement on meeting with Indian PM Modi and noted that the two made progress on a US-India trade agreement. It was separately reported that India imposed a 12% temporary tariff or safeguard duty on some steel imports.

NOTABLE HEADLINES

Fed's Goolsbee (2025 voter) said "we have got short-run inflation expectations up, but long-run expectations are not rising and that is very important". Goolsbee said the Fed needs to look to where things will be through this year and that tariffs are one input and one shock to the economy but added that the impact of tariffs on the macro economy could be modest.
US President Trump posted "“Preemptive Cuts” in Interest Rates are being called for by many. With Energy Costs way down, food prices... substantially lower, and most other “things” trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?"
US President Trump was reported to meet with Walmart (WMT), Target (TGT), Home Depot (HD) and Lowe's (LOW) executives on Monday, according to sources via Bloomberg.
It was reported that the White House has begun the search for a new Secretary of Defense, according to NPR. However, the White House Press Secretary denied this and affirmed the President stands strongly behind the Secretary of Defense.

DATA RECAP

US Leading Index Chg MM (Mar) -0.7% vs. Exp. -0.5% (Prev. -0.3%, Rev. -0.2%)

FX

USD weakened alongside the broader risk-off sentiment with the DXY firmly beneath the 99.00 level as appeal continued to drift away from Dollar-denominated assets amid economic uncertainty around tariffs and the future of Fed Chair Powell, while tier 1 data was non-existent and newsflow was light on Monday with markets in UK and Europe shut. Nonetheless, President Trump continued to ramp up his criticism against Powell and called for him to lower rates, while the latest rhetoric from Fed's Goolsbee provided very little new information.
EUR benefitted from the dollar selling which propelled EUR/USD to above the 1.1500 level although the single currency has since pulled back after hitting its strongest level since late 2021.
GBP advanced and briefly reclaimed the 1.3400 status before paring some of the gains with catalysts light amid the Easter Monday bank holiday in the UK.
JPY strengthened with USD/JPY sliding to sub-141.00 territory amid the dollar pressure and haven demand for the Japanese currency.

FIXED INCOME

T-notes declined and the Treasury curve steepened as Trump pushed for Fed Chair Powell to lower rates and calls for his termination. As such, the front-end yields fell on the apparent risk of Trump firing Powell, and putting in a new Fed Chair who will look to lower rates. However, the longer end of the curve saw yields rise with fears that low interest rate policies will only boost inflation further, with short-term inflation expectations already high, interest rate cuts would only boost these expectations.

COMMODITIES

Oil prices started the week with losses, albeit in a day of thin liquidity given that the UK and EU are still on Easter holiday. Nonetheless, WTI and Brent were lower and hit troughs of USD 61.76/bbl and 65.67, respectively, amid signs of progress in talks between the US and Iran.

GEOPOLITICAL

MIDDLE EAST

Israeli Air Force conducted a drill simulating missile and rocket attacks on bases which were the same ones targeted in previous Iranian strikes in April and October 2024, while the exercise aims to boost readiness in case US-Iran nuclear talks collapse, according to a Kan News report.
US President Trump was reportedly expected to speak with Israeli PM Netanyahu today and discuss the hostage deal and the nuclear talks with Iran, according to Axios.
US aggression reported with two raids on the Majzar district in Marib, Yemen, according to Al Jazeera citing Ansar Allah Media.

RUSSIA-UKRAINE

Ukrainian President Zelensky said a Ukrainian delegation is to hold talks in London with the UK, France and US representatives on Wednesday. Zelensky later commented that Ukraine stands by its proposal for an end to attacks on civil targets and is waiting for Russia's reply, while he added that Ukraine is ready for any conversation on how to achieve this and the first task of talks in London this week is to secure an unconditional ceasefire as a starting point.
US President Trump said they had good meetings on Ukraine, Russia, and Iran, while he added the US may meet on Wednesday with Ukraine and European allies on the peace plan and there is a good chance of a Russia and Ukraine deal this week.
Russian President Putin said Russia has a positive attitude to any peace initiatives and expects Kyiv to have the same attitude, while he said have to look at the results of the ceasefire and that Ukraine treated the truce like a "game", according to TASS.

ASIA-PAC