Morning Recap:

U.S. stock-index futures are climbing on Monday morning, fueled by reports that President Trump’s upcoming tariffs may be less severe than initially feared. Bond yields are rising, while the dollar is slipping. Early trading in Europe shows gains for both the German DAX and the FTSE 100.

Key Takeaways: 

• Mixed Earnings: Early earnings reports showed a mixed picture, with some companies beating expectations (like Verizon) and others disappointing (like 3M).
• Rising Yields: The 10-year Treasury yield continued its climb, hovering near 5%, putting pressure on growth stocks.
• Tech Earnings on Deck: Mega-cap tech earnings are the main focus this week, with Alphabet (Google) and Microsoft reporting after the bell today, and Meta and Amazon later in the week.
• Geopolitical Concerns Persist: The ongoing conflict in the Middle East continues to be a source of uncertainty, keeping oil prices elevated.
• Economic Data: US business activity edged up in October.
• Commodities Climb: Oil prices continued their upward trend, supported by geopolitical tensions. Gold also saw modest gains.
• Currency Markets Stable: The US Dollar saw mixed trading against major currencies, with little significant movement in the EUR/USD and USD/JPY pairs.

Market Overview: 

The main driver of this morning’s positive market sentiment is the overnight news regarding President Trump’s planned tariffs. Reports from the Wall Street Journal and Bloomberg, citing aides and allies, indicate that the “universal, reciprocal trade tariffs” set to be announced on April 2nd (dubbed “Liberation Day” by Trump) will be “narrower and more targeted” than previously anticipated. This suggests a less aggressive approach to trade policy, reducing fears of a widespread trade conflict that could significantly damage the global economy. 

This perceived softening of the tariff stance is impacting various asset classes. U.S. stock-index futures are up across the board, with investors seemingly relieved by the prospect of a more measured approach. Conversely, the dollar is slipping. This could be due to a few factors. A less aggressive trade stance might reduce the “safe haven” demand for the dollar. The significant jump in Bitcoin prices is notable. While the direct link to the tariff news is less clear, it’s possible that the overall improvement in risk sentiment is contributing to the renewed interest in cryptocurrencies. 

Index	Up/Down	%	Last
DJ Industrials	597.97	0.0142	42583
S&P 500	100.01	0.0176	5767
Nasdaq	404.54	0.0227	18188
Russell 2000	52.39	0.0255	2109

Economic Data:

The early part of the week is relatively light on major economic data releases. The flash PMI readings from S&P Global, due later in the morning, will offer a more timely snapshot of the manufacturing and services sectors. However, these are preliminary readings, and the market will likely be more reactive to any concrete news about the tariffs. The market is in “wait-and-see” mode regarding economic data, prioritizing geopolitical and trade policy developments.

• 8:30 AM ET: National Activity Index for February
• 9:45 AM ET: S&P Global Flash US Manufacturing PMI
• 9:45 AM ET: S&P Global Flash US Services PMI
• 9:45 AM ET: S&P Global Flash US Composite PMI

Commodities, Currencies, and Treasuries:

Oil prices are moderately higher, reflecting a balance between concerns about potential supply disruptions (depending on which countries are targeted by the tariffs) and the improved overall economic outlook due to the less aggressive tariff stance. 

Gold’s rise is consistent with its role as a safe-haven asset, although the gains are somewhat capped by the rise in Treasury yields. The weaker dollar is supporting commodity prices in general, as many commodities are priced in U.S. dollars. In the currency markets, the Euro is making slight gains against the dollar, and the Yen is weakening. The rise in the 10-year Treasury yield is significant, reflecting the market’s belief that a less severe trade conflict will allow the Federal Reserve to continue focusing on combating inflation, potentially keeping interest rates higher for longer.

Asset	Up/Down	Last
WTI Crude	0.83	69.11
Brent	0.84	73
Gold	-5.8	3015.6
EUR/USD	-0.0017	1.0797
USD/JPY	1.26	150.57

Looking Ahead: 

The primary focus for the market this week will undoubtedly be the unfolding details of President Trump’s tariff plans. While the initial reaction is positive, the specifics of the “narrower and more targeted” approach will be crucial. Investors will be scrutinizing the list of countries and products affected, and any signs of escalation could quickly reverse the current optimism. The ongoing talks between US and Russian officials regarding the Ukraine war will also be closely watched. Beyond these geopolitical factors, the economic data releases (National Activity Index and Flash PMIs) will provide further insights into the state of the U.S. economy.