Morning Bid U.S.

A look at the day ahead in U.S. and global markets from Mike

Dolan

The furious April for U.S. markets has calmed down a bit as

the month draws to a close on Wednesday, and now its time to

consider the costs to the real economy.

Today's Market Minute

* U.S. Treasury Secretary Scott Bessent says he does not back

President Donald Trump's assertion that tariff talks with China

are under way.

* Trump urges Russia to stop its attacks in Ukraine and suggests

Ukrainian President Volodymyr Zelenskiy is ready to give up

Crimea as the price of a peace deal with Russia.

* Canadian prosecutors charge a 30-year-old Vancouver resident

with murder for killing at least 11 people and injuring dozens

after he rammed an SUV through a crowd at a Filipino community

festival in the western Canadian city.

* Risks are high the global economy will slip into a recession

this year, according to a majority of economists in a Reuters

poll.

* The euro's unexpected surge since Trump's big tariff

announcement is likely to shave at least a couple of percentage

points off European company earnings, adding to the impact of

the levies themselves, according to economists.

The toll from Trump's tariffs

Some signs of de-escalation of the U.S.-China trade war

encouraged a rally in Wall Street stocks last week, while U.S.

Treasuries and the dollar were steadied by President Donald

Trump's claim that he did not intend to fire Jerome Powell,

despite his blistering attacks on the Federal Reserve Chair.

Anxiety persists, however, as none of the major economic or

corporate concerns of the past few month have been resolved and

policy visibility remains low.

U.S. stock index futures were slightly in the red

again ahead of Monday's open. Despite last week's bounce, the

S&P 500 remains down 2.6% since the April 2 Trump tariff

announcements and down 6.5% for the year to date. The tech-heavy

Nasdaq is still down 11% for 2025.

Some of the trade relief from last week was dialed back a bit

over the weekend. Treasury Secretary Scott Bessent on Sunday did

not confirm Trump's assertion that tariff talks with China were

under way and said he did not know if the U.S. president had

talked to Chinese President Xi Jinping.

Attention now turns to the toll Trump's tumultuous first 100

days in office have taken on the real economy. This milestone

will be marked on Wednesday.

Even though the first quarter gross domestic product

estimate coming on Wednesday does not capture the period since

the April 2 tariff announcement, there is still a significant

risk of a negative growth print.

First quarter corporate earnings will continue to stream in

too, with some 40% of S&P 500 firms reporting this week and four

of the once 'Magnificent Seven' megacaps - Microsoft, Meta,

Apple and Amazon - reporting on Wednesday and Thursday. The key

focus will be on the companies' outlooks for the rest of the

year.

More up-to-date will be a sweep of labor market reports

coming this week culminating in the April employment report on

Friday. Weekly jobless numbers suggest the employment picture

has held up well, leaving the Fed to focus squarely on potential

price aggravations from tariffs.

However, March inflation readings from the personal consumption

expenditures series - the one most closely watched by the Fed -

are expected to be benign when released on Wednesday too.

However, that may just be the calm before the storm.

U.S. bond markets will keep a close eye on the Treasury's

quarterly funding estimates and plans this week. 10-year yields

were subdued first thing Monday after last week's

jitters sparked by concerns about Fed independence.

The dollar index is marginally firmer, with Canada's

dollar a tad weaker as the country heads to the polls on

Monday. Prime Minister Mark Carney's Liberal Party looks set for

a return to power, an outcome that seemed unlikely before

Trump's inauguration, tariff plans and threats to Canadian

sovereignty swung Canadian opinion polls.

The dollar is down slightly against Japan's yen, with

the Bank of Japan likely to resist raising interest rates again

when it meets this week as tariff uncertainty cuts across rising

inflation numbers.

Japan's top currency diplomat Atsushi Mimura on Monday denied a

media report that Scott Bessent had told his Japanese

counterpart at a bilateral meeting in Washington that a weak

dollar and a strong yen are desirable.

Chart of the day

With the first estimate of U.S. gross domestic product for the

first quarter due on Wednesday, the Atlanta Federal Reserve's

closely watched 'GDPNow' model is still showing a real GDP

contraction for the three months through March, both on a

headline basis and when adjusted for high gold bullion imports

that weighed on net trade in the period.

The consensus of economic forecasters is for a modest

expansion of 0.4%, which is still sharply slower than the 2.4%

growth in the final quarter of last year. While GDP statistics

can be distorted and are continually revised, a first quarter

contraction would be an ominous sign nonetheless, not least

because it would have come before the April 2 global tariff

announcement. It would also raise the risk that a technical

recession could be recorded in the first half of the year.

Today's events to watch

* Election in Canada

* Dallas Federal Reserve April manufacturing survey

* European Central Bank Annual Report for 2024, with ECB

Vice-President Luis de Guindos. Bank of Finland governor Olli

Rehn speaks

* U.S. corporate earnings: Domino's Pizza, Cadence Design,

NXP Semiconductors, Teradyne, Universal Health, Cincinnati

Financial, Nucor, Brown & Brown, F5, Revvity, Roper, Waste

Management, Welltower, Alexandria Real Estate,

* U.S. Treasury quarterly borrowing estimate

(By Mike Dolan, editing by Anna Szymanski

[email protected])