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Trump Signs Tariff Order on Metals With Flexibility for Allies

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Trump follows through on tariffs, while the Hong Kong dollar approaches a key threshold, and all eyes turn to the BOJ. Here are some of the things people in markets are talking about.

All About Tariffs

President Donald Trump followed through on his pledge to impose stiff duties on imported metals, while excluding Canada and Mexico and leaving the door open to sparing other countries on the basis of national security. The U.S. will levy a 25 percent duty on steel and 10 percent on aluminum, the same level Trump promised when he revealed the plan March 1, according to a senior administration official who briefed reporters before the signing. The tariffs will take effect in 15 days, the official said. U.S. stocks rose after Trump announced the tariffs, which were narrower in scope than some traders had anticipated. Treasuries and the dollar gained.

BOJ and U.S. Jobs Ahead

With Governor Haruhiko Kuroda set to lead the Bank of Japan for another five years, much of the focus surrounding Friday’s meeting will be on what he says about the future of policy, and any comments he makes about an exit. All economists surveyed expect the central bank will keep asset purchases and yield-curve control settings unchanged, at what will be the last meeting for the two current deputy governors. Separately, the monthly U.S. payrolls report comes out on Friday as well, and it’s projected to show that the unemployment rate slipped to 4 percent, from 4.1 percent in January, with a gain of 205,000 positions versus 200,000 the prior month. The biggest jump in U.S. wages since 2009 caught markets and economy watchers off guard last month

Key Threshold for Hong Kong Dollar

Hong Kong’s dollar weakened to a fresh three-decade low, inching ever closer to the level at which the city will step in to defend the currency. Losses accelerated in Asian trading Thursday after Hong Kong Monetary Authority Chief Executive Norman Chan said there were no plans to sell additional debt, a move that would tighten liquidity and prop up the exchange rate. The currency traded above HK$7.84 per U.S. dollar, and the HKMA is required to start intervening if it reaches HK$7.85. Such a move — which would burn bearish traders and squeeze short-term interest rates — hasn’t happened since the current trading band was introduced in May 2005.

ECB Dials Back

The European Central Bank unexpectedly dropped a pledge to ramp up bond buying if the economy deteriorates, saying the turnaround in the outlook has given it confidence to change a key part of its monetary-policy guidance. In what ECB President Mario Draghi said was a unanimous decision, policy makers in Frankfurt surprised investors by ending an easing bias on quantitative easing, effectively a conditional promise to increase debt purchases in “size and/or duration” if needed. But he said downside risks remain, and added rising trade protectionism to the list of threats.

Coming Up…

Asia's traders may be looking forward to a nice, restful Friday as the BOJ delivers a peaceful policy decision along the lines of “no change, but we stand ready to deliver more powerful easing to achieve our 2 percent inflation goal.” China inflation and Philippine trade data are also due to round out a week that has been a breathtaking roller coaster ride for many markets. Europe's session features German, French, Spanish and British industrial output as well as Norwegian CPI. 

What we’ve been reading

This is what caught our eye over the last 24 hours.

— With assistance by Garfield Clinton Reynolds, Justina Lee, Piotr Skolimowski, Sho Chandra, and Shelly Hagan

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