06:28 AM EDT, 04/07/2025 (MT Newswires) -- Commerzbank in its "European Sunrise" note of Monday highlighted:

Markets: Risk sentiment remains under pressure. Asian stocks plummet (Nikkei -6%, Hang Seng -10%) and United States stock futures are also sharply lower again. U.S. Treasuries bull steepen after late Friday correction. EUR rangebound around $1.095. Brent drops to a four-year low below $64/barrel.

Fed: Federal Reserve Chair Jerome Powell says economic impact of new tariffs "is likely to be significantly larger than expected," including "higher inflation and slower growth." Inflation effects could be more persistent and Fed "doesn't need to hurry" to adjust interest rates.

U.S. Tariffs: President Donald Trump, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and trade adviser Peter Navarro all give no indication to back down. Trump says he isn't intentionally engineering the ongoing sell-off, "but sometimes you have to take medicine to fix something." Lutnick says tariffs "are definitely going to stay in place for days and weeks."

Tariffs: Italian Finance Minister Giancarlo Giorgetti says "we should not press the panic button," and "avoid a policy of retaliatory tariffs which would just be damaging for all, and especially for us." Spain's Finance Minister Carlos Cuerpo warns against a "lose-lose" escalation. China discusses frontloaded stimulus to counter tariff hit. Taiwan and India don't plan to retaliate.

Trade: Elon Musk hopes for a "zero-tariffs" system and "free-trade zone" between Europe and North America.

U.S.: Protests formed across the country against government cutbacks and attacks on democracy. Senate passes budget resolution with extension of Trump's 2017 tax cuts and $5 trillion increase to federal borrowing limit; House will debate the bill this week.

U.S.: New York Fed GDP Nowcast falls to 2.6% from 2.86% for Q1 and to 2.44% from 2.63% for Q2. St Louis model sees Q1 at 2.01% down from 2.13%.

==EUROPE:

ECB: European Central Bankl Executive Board member Isabel Schnabel says "Liberation Day was not liberating, but seems to have marked the end of global free trade"; and "as of today, we are on track towards a soft landing." Governing Council member Yannis Stournaras says tariffs risk a large eurozone demand shock and are "definitely deflationary" for the eurozone.

Germany: CDU's Thorsten Frei is "confident" that a coalition can be agreed before Easter. Public-sector workers secured 5.8% wage increase in two tranches. AfD polls on par with CDU/CSU for first time (Bild).

Ratings: Fitch affirms Italy at BBB/positive, affirms Slovenia at A and revises outlook to positive from stable. DBRS affirms US at AAA/stable.