【True Burn Finance】Powell pours cold water on rate cuts; China does not rule out negotiations with the US; ECB decision day

Overnight Highlights

· U.S. stocks fell as Fed Chair Powell warned that trade tensions could push inflation higher and emphasized the Fed is in no hurry to cut rates. U.S. Treasuries extended gains, boosted by Powell's remarks and the results of the 20-year bond auction. The Bloomberg Dollar Index hit a new six-month low as signs emerged that Trump's tariff policies are undermining investor confidence in the dollar. Oil prices rose on reports that China is open to trade talks. Safe-haven demand pushed gold prices to a new record high.

International News

· China's government is reportedly open to trade talks with the U.S., provided that Trump shows more respect and appoints a point person to lead the negotiations. Trump said significant progress has been made in tariff talks with Japanese officials. Separately, the Trump administration is reportedly preparing to use tariff negotiations to pressure other countries to limit trade with China.

· Fed Chair Powell downplayed expectations for rate cuts, stating that the strength of the labor market depends on stable prices and that tariffs could lead to persistently high inflation. The Cleveland Fed president said the Fed has good reasons to hold steady, with the focus now on keeping inflation expectations anchored.

· U.S. retail sales in March posted their biggest gain in two years as consumers rushed to buy cars and electronics ahead of tariff hikes. Manufacturing output rose modestly that month; unemployment exceeded job openings in 14 states in February, signaling a tightening labor market; homebuilder confidence edged up in April, but expectations for future demand fell to their lowest in over a year.

· The WTO downgraded its outlook for global merchandise trade this year, with North America expected to be hit hardest, while Asia and Europe are projected to continue modest growth.

· The ECB will announce its rate decision on Thursday, with a Bloomberg survey showing economists expect 25-basis-point cuts in April and June. The Bank of Canada held rates steady at 2.75%, reiterating that policymakers will proceed cautiously as they await clarity on Trump's tariff policies.

· Reuters: The Bank of Japan is expected to lower its growth forecast for the current fiscal year at its late-April policy meeting.

· Iran criticized the U.S. for shifting its negotiating stance and warned it could lead to the collapse of nuclear talks. The U.S. stepped up efforts to block Iran's crude exports to China, adding two entities and a tanker from mainland China and Hong Kong to its blacklist. Treasury Secretary Besant said the U.S. is prepared to take all necessary measures to reduce Iran's energy exports to zero.

· AMD (AMD.US) said U.S. restrictions on exports of its MI308 chips to China could cost the company up to $800 million.

Greater China News

· China's aviation industry faces a daunting challenge in maintaining and servicing hundreds of Boeing aircraft after authorities ordered airlines to halt deliveries and purchases of related parts and equipment.

· China's Commerce Ministry said it has noted that cumulative tariffs on certain U.S.-bound goods have reached 245% and vowed to retaliate resolutely.

· A Morgan Stanley survey showed that U.S. tariff actions have heightened Chinese consumers' concerns about job losses, income declines, and investment setbacks, with the share of respondents worried about unemployment hitting a five-year high.

· U.K. officials are concerned about the widespread use of Chinese-made drones in sensitive infrastructure such as power grids, reservoirs, and nuclear plants.

· A bipartisan U.S. House committee said Chinese AI firm DeepSeek poses a "profound threat" to national security and urged Nvidia to provide information on chip sales to the company.

· The New York Times: The Trump administration is considering blocking DeepSeek from purchasing U.S. products and banning Americans from using its services.

Commodities & Forex

· The Bloomberg Dollar Index hit a new six-month low as signs emerged that Trump's tariff policies are undermining investor confidence in the dollar.

· Oil prices rose on reports that China is open to trade talks. Safe-haven demand pushed gold prices to a new record high.

Earnings & Data Watch

· Eurozone ECB Deposit Facility Rate (Apr. 17) (prev: 2.50%, est: 2.25%)

· U.S. Initial Jobless Claims (Apr. 12) (prev: 223K, est: 225K)

· China Electricity Consumption YoY (Mar) (prev: 8.6%)

Source: Golden Horse Capital Management (Hong Kong) Ltd.

Author: Terry Chow

Proofreader: Penny Yang