00:00Paul, it appears to be that we are back where we started on Friday night.
00:04What is the takeaway, though, from the we're going to get 50 percent tariffs being imposed on Europe to we're going to push back to the original day?
00:13Is there any signal in this noise? Because basically, if I look at equity futures, we've completely round tripped.
00:21Yeah, good morning, Guy. I think, yeah, you're right. Probably three or so takeaways that you could extrapolate from that.
00:27However, you know, if you're in Asia and you went home on Friday after markets closed here, you know, you heard about the European news in the evening or maybe on Saturday morning, as you were saying.
00:39We went to bed on Sunday expecting a volatile market open.
00:42Got kind of the opposite when we came in because already Trump had revoked those tariffs again.
00:46So more of a flip flop. But on the other hand, something that achieved something because he seems to have managed to get Ursula von der Leyen on the line,
00:53made some progress potentially in terms of what he wants to achieve with Europe and being able to push back those tariffs in the market is reading in a number of ways.
01:02One few, a little bit of relief again. So funnily enough, even even Asian stocks managed to rally, even though they had no sort of downside on Friday from this.
01:11We've got our futures higher for U.S. and European markets today, too.
01:14Second, though, it's that unreliability factor coming back into the market equation again.
01:20People thought, oh, perhaps we're out of the out of the woods here in the tariffs.
01:23We don't need to worry about it so much. No, no, no. Back they come again.
01:26And you see that mostly in that pressure on the U.S. dollar right across the board.
01:30Wherever it is, the dollar is weakening again. Merchant market currency stronger.
01:34Developed market currency stronger. You know, the euro, the pound, everything having a good day.
01:38Partly because of the relief on the tariffs, but partly because people are just concerned about, you know, putting their money in the U.S.
01:43and it being that safe sort of value that it's always been hitherto.
01:46And so that's probably what the market will take away more than anything else from another very flip, floppy move from the U.S. president.
01:56Well, Paul, how does that move from the U.S. president ripple effect into the bond market?
02:01Because I'm looking at a bond market that's largely been range bound for quite some time.
02:05And why is there not more of a reaction function in that part of the market?
02:11Yeah, well, I mean, you are seeing that continual rise in long end yields at the moment.
02:17And that's the predominant theme, overriding everything else in the bond market.
02:22The Fed is on hold. It's not going to it's not going to be cutting, but it's not going to be raising interest rates.
02:26And people are worried about that inflationary impact.
02:28But they're more worried about the supply impacts with the big tax bill going through Congress and the House and the Senate at the moment taking some more time there.
02:38People are worried that spending is getting out of control, that there isn't that appetite for long end bonds at the moment.
02:44And we're seeing those continually rising yields as a result of it, kind of regardless of the trade policy.
02:49But also, once again, that kind of same factor playing into it, that the rest of the world is a little bit less keen on U.S. assets overall, particularly if the dollar is weakening, but also as a store of value and a haven kind of a trade.
03:02And so that's why you're seeing that shift out of U.S. Treasuries at the same time, by the way, while yields are rising everywhere else in the world, people all piling into the short end of bond markets all around the world at the moment, but showing their disdain almost for the U.S. policies by coming out of the Treasuries market.
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