Funa and political wrap: Trump expected to sign steel and aluminium tariffs Thursday

As far as political and fundamentals went for Wednesday, it was another couple of sessions where numerous headlines and comments related to the US’s latest stance on trade flowed.

However, if the situation wasn't already as clear as mud, the headlines today didn't exactly make anything much clearer. However, the markets were somewhat less angst by the possibility of trade war tensions and instead preferred to focus on economic growth despite the 300-point tumble in the DJIA futures yesterday after Cohn's resignation that followed through into the cash market in the early part of the NY session. The latest is that US Pres. Trump is expected to sign the steel and aluminium tariffs on Thursday.

As analysts at ANZ explain, President Trump tweeted that the US has asked China to cut its trade surplus with the US by $1bn this year. "But that is barely a rounding error considering the US-China imbalance was USD36bn in January alone," the analysts argued, adding, "perhaps it hints that Washington’s appetite for a trade war is actually not that high. But trade as a topic is not going to go away anytime soon and according to the Atlanta Fed, net exports are currently expected to subtract 0.6%pts from US Q1 GDP."

Key headlines:

Whitehouse/trade war/NAFTA headlines

• White House: Potential Tariff Exemptions To Be Decided On A ‘Country By Country Basis’ On National Security.
• White House Spokeswoman Sanders: Trump Expected To Sign Planned Tariffs By The End Of The Week.
• Potential Tariff Exemptions For Mexico, Canada On Basis Of National Security.
• US President Trump Seeking To Sign Presidential Proclamation On Thursday On Steel And Aluminum Tariffs - Axios, Citing Two Senior Administration Officials.
• US President Trump: China Has Been Asked To Develop A Plan To Reduce Trade Imbalance With United States - Tweet.
• Looks Forward To Seeing What Ideas China Comes Up With To Reduce Trade Imbalance With United States.
• Fitch: NAFTA Exit Would Impact US Midwest And Border States MostCanadian FinMin Morneau: Pressed For Exemption From Steel, Aluminum Tariffs, Says Tariffs Make No Sense.
• Trump Was Very Clear In Phone Call He Was Focused On Moving Forward On NAFTA, If We Could Get A Good Deal On NAFTA, There's No Need For Tariffs.

UK politics/Brexit 

• UK Government Owes GBP5.3 Tln In Pensions – ONS.
• UK PM May's Office: Saudi Investment Talks Show Clear Demonstration Of Int’l Confidence In UK Econ. Leading Up To Brexit.
• UK PM May, Saudi Crown Prince Agreed Ambition For Around GBP65 Bln Of Mutual Trade, Investment Opportunities Over The Coming Years.
• UK Finance Minister Hammond: There Is A Great Deal That European Commission & Regulators Can Do To Provide Reassurance About Brexit Transition Period.
• - Transition Period Should Not Just Be Delivered On Paper But In A Usable Way For Businesses.
• EU Rejects UK’s Plans For Post-Brexit Trade Relationship - FT.
• UK Banks Will Only Have Limited Access To The EU’s Single Market After Brexit - Bloomberg Citing EU Document.
• Draft EU Guidelines For Ties With UK After Brexit Say EU Is Determined To Have As Close As Possible Partnership With UK In The Future.
• - Given Structure Of UK Econ, It’s Hard To See How A Deal Without Services Would Be Fair For UK.
• UK Chancellor Hammond: ‘Emerging Evidence’ That Cos. Are Reassessing Commitment To Europe As A Result Of Brexit Uncertainty - RTRS.
• UK Chancellor Hammond: Impossible To Replicate UK Financial Services Sector - RTRS.
• - UK Commitment To Rigorous, Robust Fin. Regulation To Remain ‘Undimmed’ Post-Brexit.
•  UK Chancellor Hammond: UK, EU ‘Can And Should’ Collaborate Closely On Financial Services - RTRS.
•  UK Chancellor Hammond: Brexit Talks Are Negotiations Which Require Both Sides To ‘Give And Take’ - RTRS.
• - Expects Transition Period To Be Formalised At March EU Leaders’ SummitUK Chancellor Hammond: Can Do Much Better Than CETA, TTIP On Financial Services, Given UK & EU Starting Point - RTRS.
• - Trade Deal Will ‘Only Happen’ If Deal Is Fair & Balanced For Both Sides.
• UK Chancellor Hammond: UK Cannot Be ‘Automatic Rule-Taker’ In Financial Services - RTRS.
• EU Trade Plan Falls Short Of What UK Is Seeking - BBG.
• EU Parliament's Head Tajani: Sector By Sector Participation Of UK In EU Mkt Post-Brexit Is Impossible.

Data

• Fed Beige Book: Four Districts Saw ‘Marked Increase’ In Steel Prices, Partly Due To Decline In Foreign Competition.
• - Prices Rose In All Districts, Most Reports Note ‘Moderate Inflation’;
• - US Econ. Expanded At ‘Modest-To-Moderate’ Pace Across Fed Districts;
• -  Employment Grew At A Moderate Pace Since The Previous Beige Book Report;
• - Contacts Report Persistent Labour Mkt Tightness 'Across The County;
• - Several Districts Reported Worker Shortages Across Most Sectors In January And February.
• US Atlanta Fed GDPNow Q1: 2.8% (prev 3.5%).

Central Banks

• Bank Of Canada Maintains Overnight Rate Target At 1 1/4 Per Cent.
• BoC: global growth solid and broad-based.
• BoC: trade “growing source of uncertainty”.
• BoC: CDN 2017Q4 growth “slower than expected”.
• BoC: inflation running close to 2% target.
• BoC: inflation “consistent with an economy operating near capacity”.
• BoC: wage growth lower than typical in an economy with no labour market slack.
• Fed’s Bostic: Initially Saw 2 Rate Hikes In 2018, Moved To 3 Hikes On Basis Of Fiscal Stimulus:
• Needs To Take ‘Wait And See’ Attitude On Possible Tariffs;
• Tariffs Create More Uncertainty, Will Wait And See Whether Rate Expectations Should More Higher Or Lower;
• Uncertainty Means Fed Must Be More Vigilant In Monitoring US Economy;
• Tariffs Could Undercut Upside Impact Of Fiscal Stimulus, Force Fed Into Slower Rate Hikes;
• Tariffs Could Impact Anyone Involved In Int’l Trade, Given Uncertainty About How Trading Partners Will React;
• ‘Considerable’ Stock Mkt Increase Since Election Hasn’t Been Commensurate With Corp. Profits & Other Fundamentals;
• Cohn Departure Seen Having Impact, Expected To Introduce Uncertainty About Coming Econ. Policy.