One month on from Liberation Day, Japan’s $1T in US debt becomes diplomatic ammunition

EU mid-market update: One month on from Liberation Day, Japan’s $1T in US debt becomes diplomatic ammunition; De Minimis exception expired; All eyes on US jobs report.

Notes/observations

- European earnings and easing U.S.-China trade tensions lifted sentiment overnight. Denmark leads EU bloc after positive Danske bank earnings. China signaled openness to talks and waived some U.S. tariffs, despite maintaining a firm stance. Japan aims for a trade deal by June, possibly using U.S. Treasury holdings as leverage.

- US nonfarm payrolls are expected to slow sharply to around +138K in April (wide analyst estimates’ range +50-180 K). Note that the survey week (April 12th) likely excludes any lift from Trump’s tariff pause but fully reflects the new Liberation day duties. Some analysts see a sub-80 K print or a jump in the unemployment rate above 4.t3 % could trigger market volatility and sharply increase odds of a June rate cut—from roughly 5% to over 20% for next week’s FOMC and from 60% toward 90% for June.

- Continental divergence in manufacturing PMIs saw most Asian countries decline from prior month (except Philippines) while majority of EU rose or were revised higher (except Spain, potentially skewed from blackout).

- UK local elections results are filtering in. Early signs show more progress from Reform Party (right wing), with the party flipping Labour held Runcorn by just 6 votes.

- Trump is expected to release 2026 budget today and seeks cuts in govt programs of ~$163B, in areas such as health research, climate and education programs.

- As expected, US ended its $800 duty exemption (de minimis) on parcels from China/HK, adding fees that rise to $200 by June.

- Asia closed mixed with Hang Seng outperforming +1.7%. EU indices +0.6-1.5%. US futures +0.0-0.4%. Gold +0.7%, DXY -0.3%; Commodity: Brent -0.4%, WTI -0.5%; Crypto: BTC +1.3%, ETH +0.5%.

Asia

- South Korea Apr CPI M/M: 0.1% v 0.1%e; Y/Y: 2.1% v 2.0%e; CPI (ex-food/energy) Y/Y: 2.1% v 1.9%e.

- Japan Mar Jobless Rate: 2.5% v 2.4%e.

- South Korea Apr PMI Manufacturing: 47.5 v 49.1 prior.

-Taiwan Apr PMI Manufacturing: 47.8 v 49.8 prior.

- Australia Q1 PPI Q/Q: 0.9% v 0.8% prior; Y/Y: 3.7% v 3.7% prior.

- Australia Mar Retail Sales M/M: 0.3% v 0.4%e; Q/Q: 0.0% v 0.3%e.

- New Zealand Mar Building Permits M/M: 9.6% v 0.8% prior.

- Japan Pm Ishiba stated that had no common ground yet on tariff talks, was told by Econ Min that talks were constructive; no change to stance about requesting the US cancels tariffs; reaching a deal quickly not necessarily in best interest.

- Japan Fin Min Kato stated that Japan's US Treasury holdings were a card in its trade negotiations.

- China Commerce Ministry (MOFCOM) said to be conducting "assessment" on US trade negotiations; Urged the US to 'correct mistakes' on tariffs.

Europe

- Europe iaid to be prepared to make Trump a €50B offer. Bloc would not accept Washington keeping in place 10 per cent tariffs on its goods as a fair resolution to trade talks.

Americas

- Pres Trump said to seek budget cuts in govt programs of ~$163B, in areas such as health research, climate and education programs.

- Pres Trump confirmed Mike Waltz nomination as Ambassador to the United Nations (National Security Advisor Waltz to be stepping down and replaced by special envoy Witkoff).

Energy

- Pres Trump announced secondary sanctions for countries who buy any amount of oil or petrochemicals from Iran.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.92% at 532.34, FTSE +0.61% at 8,548.46, DAX +1.35% at 22,801.73, CAC-40 +1.32% at 7,694.32, IBEX-35 +0.46% at 13,348.67, FTSE MIB +0.92% at 37,951.00, SMI +1.03% at 12,218.30, S&P 500 Futures +0.25%].

Market focal points/key themes: European indices opened higher across the board and remained upbeat through the early part of the session; China signaling openness to talks on trade seen supporting risk appetite; among sectors leading the way higher are materials and technology; lagging sectors include utilities and communication services; Equinor sell its Peregrino filed to Prio Tigris; focus on US NFP to be released later in the day; earnings expected in the upcoming Americas session include Cigna, Exxon Mobil, Chevron and Berkshire Hathaway.

Equities

- Consumer discretionary: LVMH [MC.FR] +1.0% (cuts 10% of workforce; analyst downgrade).

- Energy: Shell [RDSA.NL] +3.0% (Q1 results; buyback) - Financials: ING [INGA.NL] +5.0% (Q1 results), Danske Bank [DANSKE.DK] +3.5% (Q1 results), Standard Chartered [STAN.UK] +0.5% (Q1 results), Natwest Group [NWG.UK] +1.5% (Q1 results).

- Industrials: Airbus [AIR.FR] +4.5% (Q1 results from Apr 30th, Thurs EU holiday), BASF [BAS.DE] -1.5% (Q1 results, warns uncertainty from trade duties is high).

- Telecom: Pearson [PSON.UK] -2.5% (Q1 trading update).

Speakers

- ECB Economic Bulletin cited progress in disinflation and easing core and services inflation; Economic outlook was clouded by exceptional uncertainty.

- US said to have presented draft framework to Japan in tariff talks and pushed to exclude auto and steel tariffs from the deal.

- Japan Fin Min Kato stated that a Plaza Accord 2.0 hah not come up for US talks; Japan would act in response to any surge in Chinese imports if U.S. tariffs pushed unsold Chinese goods onto global markets.

- Ukraine Cabinet submitted US-Ukraine minerals deal to parliament for ratification.

Currencies/fixed income

- USD softened a bit during the EU morning with focus on the upcoming US jobs report. Dealers believing that a payroll miss would fuel Federal Reserve interest-rate cut expectations.

- EUR/USD at 1.1320 and little phased by the uptick in EU inflation data.

- USD/JPY was off its Asian Session highs of 145.90. Other Asian currencies mostly strengthen against the USD on hopes of China-U.S. trade talks after reports circulated that China was evaluating the possibility of discussing tariffs with the US. Japan did flag that its holdings of US Treasuries could be used as leverage in the trade talks.

- 10-year German Bund yield at 2.47% and 10-year Gilt yield at 4.43%. 10-year Treasury yield at 4.21%.

Economic data

- (NL) Netherlands Apr Preliminary CPI Y/Y: 4.1% v 3.5%e; CPI EU Harmonized M/M: 1.8% v 1.1%e; Y/Y: 4.1% v 3.4%e.

- (NL) Netherlands Apr Manufacturing PMI: 49.2 v 49.6 prior (2nd month of contraction).

- (NO) Norway Apr Unemployment Rate: 2.0% v 2.1%e; Unemployment Rate (seasonally adj): % v 2.0%e.

- (SE) Sweden Apr PMI Manufacturing: 54.2 v 53.5e (9th month of expansion).

- (FR) France Mar YTD Budget Balance: -€47.0B v -€40.3B prior.

- (PL) Poland Apr Manufacturing PMI: 50.2 v 50.3e.

- (AT) Austria Apr Preliminary CPI M/M: 0.2% v 0.2% prior; Y/Y: 3.1% v 2.9% prior.

- (TR) Turkey Apr Manufacturing PMI: 47.3 v 47.3 prior.

- (ES) Spain Apr Manufacturing PMI: 48.1 v 50.1e (3rd straight contraction and lowest since Dec 2023).

- (CH) Swiss Apr PMI Manufacturing: 45.8 v 48.6e; PMI Services: 52.4 v 50.6 prior.

- (CZ) Czech Apr Manufacturing PMI: 48.9 v 48.0e.

- (TH) Thailand Apr Business Sentiment Index: 47.1 v 50.2 prior.

- (TH) Thailand May Foreign Reserves w/e Apr 25th: $255.8B v $255.9B prior.

- (IT) Italy Apr Manufacturing PMI: 49.3 v 47.0e and (13th month of contraction, but highest since Aug 2024).

- (FR) France Apr Final Manufacturing PMI: 48.7 v 48.2 prelim (confirms 27th month of contraction).

- (DE) Germany Apr Final Manufacturing PMI: 48.4e v 48.0 prelim (confirms 34th month of contraction).

- (EU) Euro Zone Apr Final Manufacturing PMI: 49.0e v 48.7 prelim (confirms 34th month of contraction).

- (IT) Italy Mar Unemployment Rate: 6.0% v 6.0%e.

- (NO) Norway Apr PMI Manufacturing: 46.1 v 50.1 prior (1st contraction in 10 months).

- (GR) Greece Apr Manufacturing PMI: 53.2 v 55.0 prior (26th month of expansion).

- (UN) Apr FAO World Food Price Index: 128.3 v 127.1 prior.

- (PT) Portugal Apr Preliminary CPI M/M: 0.7% v 1.4% prior; Y/Y: 2.1% v 1.9% prior.

- (PT) Portugal Apr CPI EU Harmonized M/M: 1.3% v 1.7% prior; Y/Y: 2.1% v 1.9% prior.

- (HK) Hong Kong Q1 Advance GDP Q/Q: 2.0% v 1.2%e; Y/Y: 3.1% v 2.1%e.

- (HK) Hong Kong Mar Retail Sales Value Y/Y: -3.5% v -7.0%e; Retail Sales Volume Y/Y: -4.8% v -8.0%e.

- Nigeria Apr PMI (whole economy) 54.2 v 54.3 prior (5th month of expansion).

- (EU) Euro Zone Apr Advance CPI Estimate CPI Y/Y: 2.2% v 2.1%e; CPI Core Y/Y: 2.7% v 2.5%e.

- (EU) Euro Zone Mar Unemployment Rate: 6.2% v 6.1%e.

- (BE) Belgium Mar Unemployment Rate: 5.9% v 5.9% prior.

Fixed income issuance

- (IN) India sold total INR360B vs. INR360B indicated in 2027 and 2035 bonds.

Looking ahead

- (RO) Romania Apr International Reserves: No est v $71.6B prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2031, 2038 and 2046 Bonds.

- 06:00 (PT) Portugal Q1 Preliminary GDP Q/Q: % v 0.4%e; Y/Y: % v 2.8% prior.

- 06:00 (PT) Portugal Mar Retail Sales M/M: No est v 1.4% prior; Y/Y: No est v 5.8% prior.

- 06:00 (PT) Portugal Mar Industrial Production M/M: No est v 4.7% prior; Y/Y: No est v 0.9% prior.

- 06:00 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £3.0B respectively).

- 07:30 (IN) India Forex Reserve w/e Apr 25th: No est v $686.2B prior.

- 07:30 (IN) India announces upcoming bill issuance (held on Wed).

- (ZA) South Africa Apr Naamsa Vehicle Sales Y/Y: No est v 12.5% prior.

- 08:00 (CZ) Czech Apr Budget Balance: No est v -91.2B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Apr Change in Nonfarm Payrolls: +138Ke v +228K prior; Private Payrolls: +125Ke v +209K prior; Manufacturing Payrolls: -5.0Ke v +1K prior.

- 08:30 (US) Apr Unemployment Rate: 4.2%e v 4.2% prior; Underemployment Rate: No est v 7.9% prior; Labor Force Participation Rate: 62.5%e v 62.5% prior.

- 08:30 (US) Apr Average Hourly Earnings M/M: 0.3%e v 0.3% prior; Y/Y: 3.9%e v 3.8% prior; Average Weekly Hours All Employees: 34.2e v 34.2 prior.

- 08:30 (CL) Chile Mar Economic Activity Index (Monthly GDP) M/M: No est v -0.5% prior; Y/Y: 3.1%e v -0.1% prior.

- 09:00 (SG) Singapore Apr Purchasing Managers Index: No est v 50.6 prior; Electronics Sector Index: No est v 50.9 prior.

- 09:00 (BR) Brazil Apr Manufacturing PMI: No est v 51.8 prior.

- 10:00 (US) Mar Factory Orders: 4.5%e v 0.6% prior; Factory Orders (ex-transportation): 0.3%e v 0.4% prior.

- 10:00 (US) Mar Final Durable Goods Orders: 9.2%e v 9.2% prelim; Durables (ex-transportation): 0.0%e v 0.0% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.1% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.3% prelim.

- 11:00 (DK) Denmark Apr Foreign Reserves (DKK): No est v 655.8B prior.

- 11:00 (CO) Colombia Apr PMI Manufacturing: No est v 49.4 prior.

- 11:00 (MX) Mexico Apr Manufacturing PMI: No est v 50.3 prior.

- 11:00 (MX) Mexico Mar Total Remittances: $5.0Be v $4.5B prior.

- 11:00 (MX) Mexico Central Bank Economist Survey.

- 12:00 (IT) Italy Apr New Car Registrations Y/Y: No est v 6.2% prior.

- (IT) Italy Apr Budget Balance: No est v -€24.4B prior.

- 12:00 (EU) Potential sovereign ratings after European close (S&P on Austria; Moody's on Germany).

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 14:00 (MX) Mexico Apr IMEF Manufacturing Index : No est v 47.2 prior; Non-Manufacturing Index : No est v 48.6 prior.