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CROSS ASSET: USD Weaker & EU Equities Rally On Trump Tariff Shift Report

CROSS ASSET
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A Washington Post story flagging Trump aides readying “universal” tariff plans saw knee-jerk selling in equity futures, although there was a quick recovery.

  • The reversal is due to the article noting that “Trump's aides are exploring tariff plans that would be applied to every country but only cover critical imports, three people familiar with the matter said - a key shift from his plans during the 2024 presidential campaign.”
  • Such a shift would lessen (although not remove all of) the inflationary worry related to Trump’s second term and perhaps promote some European equity outperformance vs. U.S. peers in the immediate term (all else equal).
  • USD lower since the headlines crossed, on the back of the potential for slightly less protectionist U.S. trade policy.
  • USD/MXN approaching Friday's lows in tandem, just above the 20.50 mark.
  • No reaction in bonds.
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A Washington Post story flagging Trump aides readying “universal” tariff plans saw knee-jerk selling in equity futures, although there was a quick recovery.

  • The reversal is due to the article noting that “Trump's aides are exploring tariff plans that would be applied to every country but only cover critical imports, three people familiar with the matter said - a key shift from his plans during the 2024 presidential campaign.”
  • Such a shift would lessen (although not remove all of) the inflationary worry related to Trump’s second term and perhaps promote some European equity outperformance vs. U.S. peers in the immediate term (all else equal).
  • USD lower since the headlines crossed, on the back of the potential for slightly less protectionist U.S. trade policy.
  • USD/MXN approaching Friday's lows in tandem, just above the 20.50 mark.
  • No reaction in bonds.