Trump's attack on Fed's Powell send US equities and US dollar lower

Good morning

Welcome back to the real world after a long and rather lovely long Easter weekend.  Another weekend of birthday celebrations in the Evans household, this time my wife’s.  Headed over the Battersea Power Station and the surrounding area, well worth a visit if you’re ever looking for something to do.  OK, its a shopping centre but pretty upmarket and there are some lovely bars and restaurants.  Very clever the way they have kept some of the original features of the old power station, and there is a life up inside one of the chimneys if you want another activity.

Had some more family and friends over, did some work in the garden, and before you know it I’m back at my desk wondering whats been going on for the past few days.  Well, Trump has been at it again.  This time he was attacking Feds Powell, referring to him as ‘Mr Too Late’ and calling him a major loser and explaining how inflation is already on the way down, rates should be lower and that the US economy could slow unless Fed cuts rates.  Trump is clearly setting the foundations for being able to place the blame for any US economic downturn squarely at the door of the Fed rather than from the turmoil left by his Liberation Day tariff plans.

We know Trump doesn’t like Powell, we know Trump wants lower rates and we know Trump thinks he knows more about the economy and monetary policy than the Fed does.  No surprises there.  But the markets took a dim view of the attack, the potential loss of independence of the Federal Reserve Bank after news broke that Trump was looking for a way to oust Powell, and weakness in the US economy is worrying investors.  With confidence low, US markets dropped heavily yesterday, ending the day around 2.5% lower, while the US dollar also traded sharply lower.

GBPUSD hit a high of around 1.3425, within a  whisker of levels seen Sept last year, we’d look back to Fed 2022 for higher GBPUSD levels.  EURUSD saw a high of 1.1570, the highest since Nov 2021.  Both pairs off those highs now, at 1.3385 and 1.1495 respectively, which puts GBPEUR around 1.1645.  USDJPY quite a mover, the pair broke below 140.00 briefly this morning, now back to 140.45, which leaves GBPJPY at 188.00. 

Gold continues to march higher, reaching a heady $3,500.  Oh those sales by Gordon Brown in the late 1990’s/early 2000’s look pretty criminal now.  I know hindsight is a wonderful thing, but I remember there being widespread unhappiness with not only the sale itself but the manner in which he did it, pretty much telling the market in advance of his plans, thereby sending prices lower still.  Price achieved for the 395 tonnes (around 12.5 million ounces) was just below the $300 mark. 

In other news, Putin has reportedly said he is open to peace talks with Ukraine, the first time I can remember him saying this.  I do fear that his approach will be ‘agree peace or we will send in those vast forces we are amassing for another full scale invasion’.   But hopefully the talks, should they take place produce some positive results.

Over Easter the Pope passed away, which could be seen as fitting for someone in such a high religious position.  It does make the Catholic Church’s 2025 Jubilee a little more complicated, as the process of both arranging his funeral and of course then finding the next Pope needs to take place.

Plenty of sport over the weekend, Liverpool have pretty much ensured their premier league title with a win over Leicester, while Spurs have pretty much ensured they’ll finish just above the relegation zone with a loss to Notts Forest.  It is getting interesting at the top of the table, with just three points separating five teams all looking for a Champions League spot, although with Spurs and Man Utd still in with a shout of the Europa League and Chelsea hopeful of raising the Europa Conference, there are many possible permutations of which teams will actually enter which tournaments. 

Of course, I have to congratulate both Leeds Utd and Burnley for assuring their promotion to the premier league next season, not the only question is which team wins the title.  Leeds are currently top on goal difference with just two matches left to play.  Sheffield Utd, who at one stage looked odds on favourites to go up, will have to settle for a play-off position, there are quite a few teams who could still take the last playoff place. 

The economic calendar today is mostly made up with Fed officials speaking, I wonder if any of them will be brave enough to speak about Trump’s latest outburst.  Tomorrow sees key PMI’s from UK, EU and US, while UK retail sales are out early Friday morning.  Meanwhile, will Trump be able to refrain from making any other market-busting comments?  I wouldn’t bet on it…

Have a great day…

-  14.30 Feds Harker speaks

-  15.00 EU consumer confidence

-  15.00 Feds Jefferson speaks

-  18.40 Feds Kashkari speaks

-  19.00 ECBs de Guindos speaks

-  23.00 Feds Kugler speaks

-  00.00 AUS manufacturing, services PMI