Welcome to February, and the moves have immediately been very dramatic. The Nikkei is down 2.66%, the dollar has soared against all currencies, and the Kiwi was the biggest loser, down 1.2%.
So, what do we know? Tariffs have been imposed on all Mexican and Canadian products at 25% and on all Chinese products at 10%, starting at 12:01 AM on February 4. There are no exemptions for product type, sector, or minimum transaction size, except for Canadian energy products, which are set at 10%. These tariffs can be scaled up if targeted countries retaliate, though the specifics of such actions remain unclear. There's no exemption process so far.
So, how about the rest of the week? The other macro events seem less important. The Bank of England announces its latest rate decision on Thursday at midday. The economy is stagnating, and the MPC is widely expected to cut interest rates to 4.5% from 4.75%. I am expecting an 8-1 vote in favor of a reduction—unlike in the U.S., the political pressures are more aligned. Friday is also important; we get to see the NFP number. The forecast suggests the U.S. added 154,000 jobs last month, down from a blockbuster 256,000 in December. Meanwhile, the unemployment rate is expected to hold steady at 4.1%. Average hourly earnings growth is seen at 0.3%, also matching December’s rate. Finally, in the equity space, Google-parent Alphabet and e-commerce giant Amazon are set to unveil their quarterly figures on Tuesday and Thursday, respectively.
As for today, we have Eurozone HCOB Manufacturing PMI, CPI, UK S&P Global Manufacturing PMI, and Atlanta Fed President Raphael Bostic speaking on the economic outlook.
Market-wise, Bitcoin fell 2.7% to $94,371.23, Ether fell 13% to $2,519.12, the yield on 10-year Treasuries declined two basis points to 4.52%, West Texas Intermediate crude rose 1.9% to $73.93 a barrel, and spot gold fell to $2,786.96 an ounce.
A busy start to the week and month...
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