Trump-Powell spat competes for market focus alongside trade developments

General trend

- Pres Trump repeated his call for Powell to lower interest rates, calling Powell a "Major loser" for good measure. Markets spat the dummy out at what they perceived as further risk-off from the US.

- USD/JPY resumed its fall, breaking below 140 for fist time since Sept 2024 while the Dollar Index (DXY) broke below 98 to 97.90 and Spot Gold nearly hit $3.500 for the first time ($3,495/oz). Nasdaq and S&P FUTs did recover a small portion of their substantial overnight losses.

- Contradictory press reports overnight with some BOJ sources reporting that Japan might find it difficult to ignore calls from the US for higher rates in Japan, while other reports said that the BOJ is seeing little need to change its rate stance at the present time with OIS showing only a 1.5% chance of a 25bps BOJ hike on May 1st , with a July hike at 31.0%.

- Signs of spreading economic stress in due to trade war in China, as despite a lack of domestic demand, Chinese e-commerce giants are launching initiatives to help China exporters switch to domestic sales.

- Stress also in Japan as financial authorities asks banks to help support small company financing for those affected by US tariffs, as Japan's trade rep confirmed Japan and the US are deciding the 'scope' of the trade talks. Also beefs up US tariff negotiation team.

- Trump Admin trade agenda with Italy (and potentially the EU) may be pushed up with the passing of Pope Francis, with Trump posting that he Melania will be going to the funeral of Pope Francis, in Rome. Follows on from last week’s meeting with Italian PM Meloni saying that we'll make a trade deal with the US over tariffs and invited US Pres Trump to Italy.

- In other US trade news, Thailand-US tariff talks reportedly delayed from the scheduled Apr 23rd , while USTR and India finalized terms of reference for a road map for reciprocal trade negotiations. Meanwhile India under pressure from the US to allow Amazon and Walmart’s Flipkart full market access. Finally, Vietnam instructed officials to crack down on illegal transshipment of goods.

- Standard Lithium Ltd shares nearly doubled in after-hours trading after the Trump Admin gave its Arkansas lithium JV special designation as a priority critical mineral project. [Perhaps more such deals to come?].

- As the China offshore Yuan settles into a trading range ~7.30 vs USD having hit a record 7.43 just two weeks ago, Chinese press said that “Exchange rate stability is the 'best' available option for policymakers.”

- New Zealand Q1 exports surged to a record NZ$20.6B on a low kiwi dollar and high commodities prices, as the March trade surplus nearly doubled m/m. Kiwi dollar retook 60c.

- US equity FUTs +0.4% during Asian trading.

Looking ahead (Asian-weighted news, using Asian time zone)

- Wed 23rd AU/JP/IN Flash Apr PMIs, SG Mar CPI, ID Rate Decision, (Wed eve DE/EU/UK/US Apr Flash PMIs).

- Thu 24th KR Q1 GDP, RBA Bulletin, (Thu eve DE Apr Ifo Business Climate, Thu night US Mar Durable Goods, US Mar Home Sales).

- Fri 25th JP Apr Tokyo CPI, (Fri eve UK Retail Sales).

Holidays in Asia this week

- Mon 21st Australia, Hong Kong, New Zealand.

- Fri 25th Australia, New Zealand.

Headlines/economic data

Australia/New Zealand

- ASX 200 reopens -0.1% at 7,812.

- New Zealand Mar Trade Balance (NZD): +0.97B v +0.5B prior.

China/Hong Kong

- Hang Seng reopens -0.4% at 21,303; Shanghai Composite opens -0.1% at 3,289.

- Hong Kong's Offshore Yuan 1-month HIBOR rate falls 11bps to a record low of 1.46% [lowest since data became available in 2013] - financial press.

- China banks have little incentive to lower their benchmark lending rates amid historically low NIMs, keeping LPR unchanged in Apr met expectations; cites analysts - China Securities Daily.

- (US) Reportedly Trump officials have suggested to Chinese diplomats that Foreign Min Wang Yi reach out to Sec of State Rubio; So far, China has refused to engage on this front - WSJ (update).

- Reportedly Chinese e-commerce giants Alibaba, JD.com and Pinduoduo launching multi-billion-dollar initiatives to help traditional exporters switch to domestic sales - FT (update).

- China state-backed funds cut off new investment in US private equity – FT.

- China PBOC sets Yuan reference rate: 7.2074 v 7.2055 prior.

- China PBOC Open Market Operation (OMO): Injects CNY221B in 7-day reverse repos; Net injects CNY56B v injects CNY133B prior.

Japan

- Nikkei 225 opens -0.4% at 34,173.

- Japan Fin Min Kato: No concrete impact from tariffs yet, but have concerns; Will head to US for global meetings today - financial press.

- Japan expands US tariff task force to mull bargaining points in negotiations - Nikkei (update).

- Japan Economy Revitalization Min Akazawa: Will not comment on US domestic situation; confirms Japan and the US are deciding the 'scope' of the trade talks.

- Japan high-level delegation to deliver a letter from PM Ishiba to China President Xi this week – US financial press.

- Japan MOF sells ¥450B v ¥450B indicated in JGBs in liquidity enhancement auction; bid-to-cover: 2.87x v 2.39x prior.

- Follow up: Japan financial authorities reportedly to ask banks to help support small company financing for those affected by US tariffs - press.

- BoJ said to see little need to change rate stance right now; hard to reflect uncertainty in base case for now - Press.

- Reportedly Japan's ruling LDP party set to make an emergency proposal later on Monday, Apr 21st in the wake of the US tariffs, urging the govt to strengthen loan support for companies and boost domestic demand - press.

- BOJ Gov Ueda said to travel to Washington DC, US on Apr 22-27th - press.

Korea

- Kospi opens -0.3% at 2,481.

- South Korea Mar PPI Y/Y: 1.3% v 1.5% prior.

- South Korea Acting President Han: Expects trade talks with the US to pave the way toward a mutually beneficial solution.

- Follow Up: Officials from South Korea and the US to discuss ways to participate in joint sanctions pressure on China, increase South Korea imports of US beef and rice when they hold trade talks this week - South Korea press.

- South Korea DP [opposition party] Lee: Vows to shut down Korea's coal power plants by 2040 - financial press.

- Bank of Korea (BOK) Gov Rhee: Export-oriented nation such as South Korea is "vulnerable to external changes" - financial press.

Other Asia

- India reportedly under pressure from US to give Amazon and Walmart's Flipkart full market access - FT.

- Follow up: Vietnam Trade Ministry: Instructs officials to crack down on illegal transshipment of goods; Increase controls of imported goods and release of 'Made in Vietnam" certificates - document.

- (IN) USTR and India Ministry of Commerce finalizes terms of reference laying out road map for reciprocal trade negotiations - statement.

- Thailand-US tariff talks said to be delayed (originally Apr 23rd) - Thai press.

- India said to place 12% temporary tariff or 'safeguard duty' on steel imports to restrict Chinese and others steel imports - press.

North America

- (US) Agriculture Sec Rollins: Tax payer money should not pay for 'sugary foods' - Fox News interview.

- (US) Fed's Goolsbee (voter): Short run inflation expectations are up, but market based longer run still well anchored; We need to wait it out to figure out what to do - CNBC.

- (US) MAR LEADING INDEX: -0.7% V -0.4%E.

- (US) US Pres Trump: Repeats call for Powell to lower interest rates; There's virtually no inflation but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.- Truth post.

- (MX) Mexico Pres Sheinbaum didn't reach a final trade agreement in the latest call with Trump.

- (US) US Pres Trump: Tariff negotiations are going very well; We're going to make a lot of money; Economy has been good, energy is down; EU has been fine.

- (US) Reportedly the US may meet Weds with Ukraine and European allies to discuss peace plans - press.

Europe

- (IT) US Pres Trump: Melania and I will be going to the funeral of Pope Francis, in Rome - Truth Social Post (update).

- (EU) ECB's Kazaks (Latvia): Tariff war is adding economic risks.

Levels as of 01:20 ET

- Nikkei 225 -0.2%, ASX 200 -0.1%, Hang Seng +0.4%; Shanghai Composite +0.4%; Kospi -0.3%.

- Equity S&P500 Futures +0.4%; Nasdaq100 +0.4%; DAX -0.7%; FTSE100 -0.4%.

- EUR 114.82-1.1540; JPY 140.00-141.17; AUD 0.6402-0.6440; NZD 0.5981-0.6023.

- Gold +1.9% at $3,489/oz; Crude Oil +0.8% $62.92/bbl; Copper +1.3% at $4.7795/lb.