US credit risk indicators jump, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on April 4

Global Market Review

1. European and American market trends

The three major U.S. stock futures continue to fall, Dow futures, Nasdaq 100 index futures, and S&P 500 index futures all fell by more than 3%. Among them, the Nasdaq 100 futures fell 20% from its historical highs. European stocks fell rapidly, with the German DAX index plummeting 5.00% during the day, the French CAC40 index plummeting 4.5%, the Italian FTSE MIB index falling 7%, and the Spanish IBEX35 index falling 6%.

2. Market news interpretation

The U.S. credit risk indicator jumped to the largest increase since the regional banking crisis

As tariff concerns continue to impact the global bond market, a key risk indicator for investment-grade bonds soared, marking the largest increase since the regional banking crisis. The spread of the MarkitCDX North American Investment-Grade Bond Index once widened by 8.3 basis points, the largest change since March 2023, to 75.5 basis points.

The EU challenged Italy's "golden power" rules

① The European xmserving.commission questioned that Italy's use of "golden power" legislation to review bank acquisitions may limit Italy's ability to review strategic corporate acquisitions; ② The so-called "golden power" allows the Italian government to set conditions or prevent foreign and domestic enterprise acquisitions in strategic fields such as energy, telecommunications and banks; ③ The EU requires Italy to provide detailed information about its application of the legislation to review potential bank acquisitions, otherwise it may initiate infringement procedures; ④ "golden power""It was originally designed to resist unpopular external acquisitions at the EU level, and was expanded to protect strategic xmserving.companies during the COVID-19 pandemic; ⑤ Some member states such as Italy applied it to the banking industry, although the European Central Bank is the agency responsible for banking supervision and the EU treaty advocates the free flow of capital; ⑥ The use of "gold power" increases the bureaucratic cost of enterprises, forcing them to hire legal experts and submit documents to avoid violations; ⑦ The EU is currently reviewing its framework for reviewing foreign direct investment to achieve a more unified application among member states; ⑧ The Italian government hopes to understand how the EU framework will be revised before considering adjusting its own legislation.

Behind the decision to increase production

① OPEC+ unexpectedly decides to increase production, saying that it is "accumulated" "The market is turbulent due to concerns about global trade conflicts, and oil prices fell sharply; ② Kazakhstan's oil production hit a record in March, and it did not xmserving.comply with OPEC+ production quota, which far exceeded the limit, highlighting the lack of discipline among some members; ③ OPEC+ has effectively managed global oil supply and prices in recent years, but the problem of illegal increase in production among members is becoming increasingly serious. Saudi Arabia, as the actual leader, may be dissatisfied with the behavior of Kazakhstan and other countries; ④ Russia has also taken action on Kazakhstan's oil exports and closed some berths at its main export ports, which may be related to the growth of Kazakhstan's exports; ⑤ This increase in production is good news for the United States, which is in line with the US's willingness to lower oil prices, and may alleviate the impact of US sanctions on Iran; ⑥ Oil prices have dropped sharply The decline will curb some member states that require higher oil prices to balance the budget, such as Iraq and Kazakhstan. Saudi Arabia may use this to punish these countries. Although Saudi Arabia itself also needs higher oil prices to balance the budget; ⑦ Overall, OPEC+'s increase in production in an overprofit market facing huge downside risks is not based on rational economic considerations, but is trying to cover up the fact that members lack discipline, showing that they are still in control, but actually highlights its difficulties in maintaining their own narrative.

Forecast of the impact of US non-farm data on the US dollar

①U.S. non-farm employment report will be released at 20:30 Beijing time, and the results will have an important impact on the trend of the US dollar. ②In the past few months, due to the impact of US tariff policies, the report's influence on the US dollar has weakened, but Still one of the most important economic indicators in the United States. ③The average monthly 162,000 jobs in the United States have been added on average in the past 12 months, while the current median market expectation is 140,000. ④Analysts’ forecasts vary widely, with the lowest expected at 80,000 and the highest expected at 200,000. ⑤ Recently, the hard data of the labor market has different situations from the sentiment indicators. For example, the number of applicants for initial unemployment benefits remains at a low level, and the JOLTS report shows that the turnover rate is low and the vacancy rate is high. ⑥ However, the service industry ISM employment sub-index fell 7 points yesterday to 46.2, indicating that layoffs are likely, which is the second lowest level since the end of the epidemic. ⑦ If today’s reading meets median expectations or even higher, it will provide significant support for the US dollar and alleviate the current situation mainly based on the situation.Recession concerns of indicators. ⑧If the reading is lower than expected, or even lower than the minimum expectations, as economists of the bank expected, the US dollar will face pressure again.

Eni Group's view on the oil market

① Italian oil xmserving.company Eni Group believes that given the impact of Venezuelan oil being subject to a stricter embargo, OPEC's actual output growth may be smaller than the announced one. ②Eni Group said that oil and gas xmserving.companies were not affected by U.S. tariffs.

German industrial orders unexpectedly stagnated in February

①German industrial orders unexpectedly stagnated in February, and the decline in orders in January was revised to a relatively ease. ② Reuters' survey of analysts showed that orders are expected to grow by 3.5%, but are the same as last month after seasonal and calendar adjustments. ③ Germany's new orders from December to February were 1.6% lower than the previous three months. ④Alexander Krueger, chief economist at Hauck Aufhaeuser LampePrivatbank, said that the order situation is still bleak, and US tariffs put greater pressure on German industry, which may lead to continued layoffs. ⑤The United States is Germany's largest trading partner in 2024, with the trade volume between the two sides reaching 253 billion euros. ⑥ German manufacturing industry saw its first production growth in nearly two years in March. ⑦ Ralph Solveen, senior economist at xmserving.commerzbank, said orders hovered at low levels over the past year or so, and the gradual recovery in the xmserving.coming months could be very moderate due to a sharp increase in U.S. tariffs. ⑧ Jupp Zenzen, an economic expert at the German Chamber of xmserving.commerce and Industry, said that the economy is still in a state of stagnation. ⑨ Domestic orders in Germany fell by 1.2% month-on-month, while foreign orders increased by 0.8%. ⑩ German Federal Statistics Agency revised its new order decline from 7.0% to 5.5%, the difference stemming from delayed reporting of data from metals, machinery and equipment and automotive industries.

Japanese businesses and farmers are worried that Trump's new tariffs will cause huge losses

① Additional automobile tariffs and reciprocity tariffs imposed by the Trump administration may cause serious blows to the Japanese industry. ②The new reciprocity tariffs cover almost all products exported to the United States. ③ Japanese xmserving.companies are working hard to discuss measures to deal with tariffs, but adjusting the production system is not easy. ④ Ken Kobayashi, chairman of the Japan xmserving.commercial and Industrial Conference, expressed strong concerns about the additional 25% tariff on automobiles, saying that the automobile industry's supply chain is wide and that the tariffs will have a huge impact on Japan's overall economy, resulting in a decrease in orders, investment and employment. ⑤ Ruisui Research and Technology xmserving.company estimates that the new tariffs will reduce the operating profit of Japanese auto xmserving.companies by about 20%. Six Japanese auto xmserving.companies operating in the United States have consolidated operating profits of 8.2 trillion yen in fiscal 2024, which may lose 1.6 trillion yen due to tariffs. ⑥Toyota plans to temporarily bear the increase in costs on its own and keep the prices of vehicles in the US market unchanged; while Mazda Automobile President Masahiro Mori said that if the costs could be reduced to offset tariffs, he would have done so long ago. ⑦ Komatsu xmserving.companyxmserving.comConstruction and mining vehicle sales are about 3.6 trillion yen, of which about 30% are produced in North America. The xmserving.company said it is studying the impact of tariffs, but the impact on business performance is inevitable. ⑧Yamaha engines export outboard motors and parts from Japan to the United States, and the expected impact on its operating profit is billions of yen. The xmserving.company's president, Takehara Motoshi, said that he could not fully bear the tariff costs on his own and needed to ease the impact by raising prices or changing suppliers. ⑨ The Japanese government has been xmserving.committed to expanding exports of agricultural, forestry and fishery products and food, but additional tariffs may hinder this effort. ⑩ A spokesperson for the Japan Rice and Rice Industry Export Promotion Association said that even if farmers work hard to reduce costs, increasing tariffs will weaken product xmserving.competitiveness and hinder Japan's rice quality improvement and export growth.

India's economic growth is affected by tariffs and countermeasures

① US tariffs may slow India's GDP growth by 20-40 basis points this fiscal year, prompting the central bank to further cut interest rates. ② Goldman Sachs lowered India's growth forecast from 6.3% to 6.1%, Citi expects tariffs to drag down growth by 40 basis points, and QuantEco Research expects impact of 30 basis points. ③Inflation is expected to be an average of 4.2% this fiscal year, close to the central bank’s target. The central bank cut interest rates for the first time in February, and the meeting from April 7-9 is expected to drop by another 25 basis points to 6.00%. ④ Economists had previously expected to suspend interest rate cuts after falling to 5.75% in August, but U.S. tariffs changed expectations. Goldman Sachs and other institutions are now expected to cut interest rates by 75 basis points this fiscal year, and policy interest rates fell to the lowest 5.5% since August 2022. ⑤Citi India’s chief economist Samir Chakraboti said that this is an appropriate risk minimization strategy when growth faces greater downside risks while inflation is lower. ⑥ India's economic growth is expected to fall to a four-year low of 6.5% in the fiscal year ended March 31, as city demand weakened by high inflation, liquidity tensions and slowing lending growth in central bank rules. ⑦ After the new president took office, the central bank significantly relaxed liquidity conditions and postponed further tightening of bank regulatory plans. ⑧In February, the government announced tax cuts to Indians with annual revenue of no more than Rs 1.2 million in its annual budget to stimulate domestic demand. ⑨ Government sources said tax cuts and monetary policy easing will help domestic demand. India does not need xmserving.comprehensive economic stimulus at present, but it can solve the pressure on specific industries through targeted measures. ⑩ QuantEco Research economist Vivek Kumar said that rewriting trade rules will prompt global policy makers to work hard to stimulate domestic consumption and demand, and India can achieve it by cutting interest rates and devaluing its local currency.

3. Trends of major currency pairs in the New York Stock Exchange before the New York Stock Exchange

Euro/USD: As of 20:18 Beijing time, the euro/USD rose, and is now at 1.1066, an increase of 0.13%. EUR/USD price rose in recent intraday trading before New York, after falling earlier as it tested a significant resistance of $1.1090 in an attempt to gather positive momentum to helpHelp it break through that resistance as it trades along the short-term trend line, with the main upward trend dominating.

GBP/USD: As of 20:18 Beijing time, GBP/USD fell and is now at 1.3033, a drop of 0.51%. Before the New York Stock Exchange, the GBP/USD price fell due to profit-taking in recent intraday trading, while as negative signals emerged, positive momentum was accumulated by venting overbought saturation in the stochastic indicators, the price was boosted when trading above the 50 candle SMA, and the price was traded along the trend line, with the main upward trend dominating.

Spot gold: As of 20:18 Beijing time, spot gold fell, now at 3100.33, a drop of 0.44%. Gold prices began to rebound in recent intraday trading before the New York Stock Exchange, after accumulating positive momentum as it tested the main uptrend line in the short term while relying on the support of the 50 candlestick to help prices rebound.

Spot silver: As of 20:18 Beijing time, spot silver fell, now at 30.972, a drop of 2.68%. Before the New York Stock Exchange, silver prices fell in recent intraday trading, while trying to regain some of the previous losses and vent oversold saturation in the stochastic indicators as positive signals emerged from it, which helped price stability, although briefly under heavy selling pressure.

Crude oil market: As of 20:18 Beijing time, U.S. oil fell, now at 62.110, a drop of 7.21%. Before the New York Stock Exchange, U.S. crude oil prices fell freely at the intraday level with the dominant downward trend, and the price broke through the current support of $63.10, as the stochastic indicators showed negative signals, indicating the intensity of the selling momentum despite settlement at the oversold level.

4. Institutional Views

Goldman Sachs: Trump's tariff paymentsHolding the European Central Bank cut interest rates three times before the summer

Goldman Sachs economists said the latest U.S. tariffs have strengthened the possibility of the European Central Bank's interest rate cut this year, including a rate cut in April. They said in a report that a strengthening euro and more aggressive tariffs on East Asia and other parts of Europe meant downside risks for euro zone inflation, which increased the likelihood of the ECB cut three more rates, with the ECB deposit rate expected to drop to 1.75% by July. Financial conditions have also tightened since the tariffs were announced. Furthermore, the tough wording of the U.S. government on foreign retaliation means greater risks of escalating trade tensions, which could push the eurozone into a technical recession. Goldman Sachs currently forecasts the euro zone's 2025 growth rate at 0.8% after assuming a trade-related blow.

Nomura Securities: U.S. tariffs will force the Federal Reserve and the European Central Bank to cut interest rates faster

① U.S. reciprocal tariffs will curb economic growth and push up inflation, forcing the Federal Reserve to cut interest rates from the end of this year. The European Central Bank may cut interest rates as early as this month, Nomura Securities said. ②U.S. President Trump imposed extensive tariffs on dozens of countries on Wednesday, exacerbating the threat of a global trade war and raising concerns about a slowdown or even a recession in global economic growth. ③Nomura Securities said tariffs were "worse than expected", lowering U.S. GDP growth forecasts from 1.5% to 0.6% (quarterly calculated) and raising the core PCE (the Fed's favored inflation indicator) forecast at the end of the year from 3.5% to 4.7%. ④ Therefore, the securities expect the Federal Reserve to start cutting interest rates in December, lowering the policy rate to 4.125%, and conducting two more 25 basis points rate cuts in the first quarter of 2026. ⑤ Previously, Nomura Securities expected the Federal Reserve to maintain an interest rate of 4.25%-4.5% until the second quarter of 2026. ⑥ Nomura economists said in a report on Thursday that "the increased downside risk of growth and the early impact of inflation should enable interest rate cuts to start earlier than we expected." ⑦ Traders have overall raised their expectations for a rate cut this year to a full percentage point from the previous 75 basis points. ⑧Nomura Securities said the ECB will act faster than the Fed because Trump's tariffs actually raise EU tariffs to 20%. ⑨ The securities predicted in another report on Thursday that the region's inflation outlook was uncertain and lowered growth expectations by 20 basis points. ⑩ Therefore, Nomura Securities now expects the ECB to cut interest rates in April and June — rather than in June alone — to reach 2.00%, down from the previous forecast of 2.25%. ? After the tariffs are implemented, traders expect a 25 basis point rate cut this month is about 70%. They expect deposit rates to reach 1.75% by the end of the year, which means three more rate cuts will be made.

The above content is all about "[XM Foreign Exchange Market Analysis]: The US credit risk indicators have jumped, and the short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on April 4" was carefully xmserving.compiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading!Thanks for the support!

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