Rise and shine everyone.

It would seem that Trump’s discussion of tariffs has stirred up some issues for the market again. Trump announced plans to impose 25% tariffs “on Day One” against Mexico and Canada, with an additional 10% against China. The move, attributed to ongoing concerns over drug trafficking into the U.S., triggered a swift reaction in currency markets.

The Kiwi slid to a one-year low at $0.58, the Aussie dropped 1%, and the Canadian dollar fell to its weakest level against the USD since the 2020 pandemic, nearing the 1.42 handle. The Mexican Peso was hit hardest, tumbling 2%. APAC Equities also fell with the Nikkei leading the way down.

Silver, Gold and WTI Oil also extended overnight losses but recovered through the course of early trading. US equities are marginally higher in the pre-market while the USD remains flat and the Yields push higher.

The lower volume of trading this week was not the most helpful thing for markets yesterday. We saw quite a lot of downward pressure, led by tech and Nvidia. Sector rotations were interesting yesterday. Real Estate led, followed Materials.

Keeping an eye on weight loss stocks - Eli Lilly, Hims, Novo Nordisk - after news that President Biden has proposed that weight loss drugs ought to be covered by Medicare and Medicaid.

The macro focus for today will be the FOMC minutes released at 2pm ET, ahead of tomorrow’s PCE data. Investors will be looking for clues on the Fed’s discussions surrounding the future rate path, inflation concerns and unemployment data.

Chart of the Day

A few stats from BofA:

Table 1 shows us that we’re in a period of favorable seasonality for the S&P 500. This becomes even more pronounced in election years, as seen in Table 2. And finally, Monday tends to be the worst day of the week, while Wednesday and Friday tend to be stronger.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)