White House press secretary: ‘Great optimism in this economy’
The White House held its daily press briefing this afternoon, fielding questions about tariffs and the economy. The overall sentiment: “There is great optimism in this economy”.
“This is a proven economic formula,” press secretary Karoline Leavitt said.
It’s a line the White House continues to repeat even as volatility in the stock market appears to have rattled investors.
Answering a question about US bonds, which is supposed to be one of the world’s most stable assets, and how they’re decreasing in value, Leavitt said that treasury secretary Scott Bessent is “keeping a very close eye on the bond market”.
Leavitt maintained that Trump’s tariff negotiations have so far been a success, saying that “15 offers are on the table” and the White House has heard from over 75 countries over deals.
Even when it comes to China, which slapped a 125% tariff on American exports, Leavitt said that Trump is “optimistic”, though could not give any details on how a deal with China could be made.
Key events
What’s happening with the US treasury bond market is a pretty big deal.
Treasury bond yields rose on Friday, a sign of further instability in what’s supposed to be a very safe financial asset to hold.
The benchmark is the 10-year treasury bond, the yield of which rose to 4.6% today, over half a percentage point since last week.
This is a big deal because the yield on treasury bonds are closely tied with the cost of other loans, like mortgages or car loans. So if the yield rises, loans like mortgages are likely to go up as well.
That overall leads to a contractionary economic environment – less people are buying homes and investing money in general.
Yield rates also point to inflation expectations. Bloomberg says this is the largest surge in the yield rate since the 1980s, when inflation peaked to 14%.
Minneapolis Federal Reserve president Neel Kashkari explained it to CNBC on Friday: “If the trade deficit is going down, it could be that investors are saying, ‘Okay, America no longer is the most attractive place in the world to invest’, and then you would expect to see bond yields go up.”
So the fact that bond yields are going up – and the dollar is depreciating, and the stock market is making historical fluctuations – points to some serious instability in the economy.
White House press secretary: ‘Great optimism in this economy’
The White House held its daily press briefing this afternoon, fielding questions about tariffs and the economy. The overall sentiment: “There is great optimism in this economy”.
“This is a proven economic formula,” press secretary Karoline Leavitt said.
It’s a line the White House continues to repeat even as volatility in the stock market appears to have rattled investors.
Answering a question about US bonds, which is supposed to be one of the world’s most stable assets, and how they’re decreasing in value, Leavitt said that treasury secretary Scott Bessent is “keeping a very close eye on the bond market”.
Leavitt maintained that Trump’s tariff negotiations have so far been a success, saying that “15 offers are on the table” and the White House has heard from over 75 countries over deals.
Even when it comes to China, which slapped a 125% tariff on American exports, Leavitt said that Trump is “optimistic”, though could not give any details on how a deal with China could be made.
US stocks pick up during midday trading
US stocks are picking up as we enter midday trading:
It’s unclear if this upswing will last into this afternoon. It’s a slight turnaround from this morning, as stocks went down on news that consumer sentiment and inflation expectations cratered in April.
The University of Michigan just released the results of a new consumer sentiment survey that shows consumers in April expect the inflation rate to climb to 6.7% – the highest expected level in over four decades.
Falling consumer sentiment is a bad sign for the economy, as it typically means that people will be spending less, especially if they anticipate prices climbing, which could slow down the overall economy.
Phillip Inman
Donald Trump’s tariff war has spooked stock markets and heightened fears of a recession in the US and Europe. But neither factor appears to have been what motivated the president’s sudden volte face this week, when he paused most of his “liberation day” border taxes for 90 days.
The fact Trump could not ignore was a mass sell-off by investors of US government bonds. But what exactly are bonds, how are they traded – and why are they so central to the current crisis?
Ministers should focus on rebuilding bridges with the EU, UK Labour politicians have said after a senior adviser to Donald Trump downplayed the prospect of a breakthrough with the US.
MPs said the government should “prioritise our trading relationship with the EU” and “get a sugar-rush of growth” instead of banking on the prospect of preferential treatment from Washington.
Trump imposed 10% tariffs on all UK exports this month, with several other markets, including the EU, facing steeper rates. After financial markets plummeted, the US president announced a temporary reprieve on Wednesday, slashing tariffs on almost all other countries to his baseline of 10%. Car, steel and aluminium imports continue to face a higher tariff of 25%.
The government is in advanced negotiations with the US over a trade deal to secure more favourable arrangements for the UK. However Kevin Hassett, an economic adviser to Trump, told CNBC on Thursday that any deal that would persuade the president to go below 10% would need to be “extraordinary”.
Asked if she was losing confidence in the prospect of a US trade deal, Rachel Reeves told reporters on Friday that “we continue to engage with our counterparts in the United States”.
Marina Dunbar
Several senior Senate Democrats have written a letter asking the Securities and Exchange Commission (SEC) to investigate whether Donald Trump violated securities laws and engaged in insider trading and market manipulation while switching course on his global tariffs.
“We urge the SEC to investigate whether the tariff announcements, which caused the market crash and subsequent partial recovery, enriched administration insiders and friends at the expense of the American public and whether any insiders, including the president’s family, had prior knowledge of the tariff pause that they abused to make stock trades ahead of the president’s announcement,” said the letter, led by Massachusetts senator and former presidential candidate Elizabeth Warren.
Early Wednesday, Trump announced on social media: “THIS IS A GREAT TIME TO BUY!!!” The post was written at a time of severely volatile market trends and US indices down.
Hours after his post, the US president abruptly announced a 90-day pause on many tariffs. The move sent the US’s S&P 500 back up several percentage points in just minutes. Wednesday ended up marking the best day for the S&P 500 since the recovery from the 2008 financial crisis.
The letter was also signed by Senate minority leader Chuck Schumer, finance committee ranking member Ron Wyden, the Arizona senators Mark Kelly and Ruben Gallego, and California’s Adam Schiff.
Richard Partington
In the global fallout from Donald Trump’s “liberation day” tariff announcement, it appears nowhere is safe. Crashing share prices, a sell-off in bonds and currency chaos erasing trillions of dollars of wealth in a matter of days.
On Friday the dollar fell by more than 1% relative to a basket of other currencies to reach its lowest level in three years, compounding an almost 10% slide since the start of the year. In the space of a week, it has lost about 3 cents against the pound and 4 cents against the euro.
Even after the president’s partial U-turn – freezing tariffs at 10% on all US imports except those from China for 90 days – markets swung from relief rally to fresh rout, as investors questioned the once unthinkable: could the US dollar be losing its unassailable safe haven status?
“The damage has been done,” said George Saravelos, the head of foreign exchange research at Deutsche Bank. “The market is re-assessing the structural attractiveness of the dollar as the world’s global reserve currency and is undergoing a process of rapid de-dollarisation.”
Rowena Mason
The UK parliament is being recalled on Saturday to vote on emergency legislation that will bring British Steel under government control, No 10 has said.
The bill will give the prime minister the power to “direct steel companies in England”, which No 10 will use to stop Jingye, the Chinese owners of the Scunthorpe site, from closing it.
The government has been considering nationalising British Steel as the company has said it wants to shut the plant.
The GMB union said the move looked like “the first step in the process” of nationalisation, saying it was the only way to save the UK steel industry.
“The business secretary must be given huge praise for acting decisively to safeguard this vital industry and the thousands of jobs that rely on it,” the union said.
Dan Milmo
The AI-generated video of tired-looking Americans making mobile phones, which circulated widely on social media this week, was a pointed vision of a post-tariff world. But Donald Trump wants it to become reality for Apple.
The iPhone maker is one of the biggest victims of the US president’s realignment of the global trading order because its flagship product is assembled in the epicentre of Trump’s protectionist ire – China.
“The iPhone is a quintessential representative of a global supply chain,” says Fraser Johnson, a professor at Ivey Business School in Canada and an Apple supply chain expert.
More than 1,000 components from all over the world go into an iPhone but they are largely put together in China. Apple is secretive about its production details but analysts estimate that about 90% of its iPhones are assembled in the country.
This is deeply problematic for the California-based firm because Trump has imposed “reciprocal” tariffs – a tax on imports – of 125% on goods imported into the US from China.
On Thursday it became clear a separate 20% fentanyl-linked border tax would be levied on top of this, taking the total burden to 145%. Apple faces paying a hefty sum on any iPhone brought into the US, which is likely to be passed on to consumers in the form of higher prices.
The day so far
In case you’re just joining us, here’s a recap of the latest news and global market moves since the European market open. (You can see the earlier round-up here)
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Europe’s main indexes started on a surprisingly positive note at the start of trading, as markets seemed to recover some ground from the tariff sell-off, even as it became clear that Trump had applied 145% tariffs on Chinese goods
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Mining giants, supported in part by growing appetite for safe haven assets like gold, were leading the FTSE 100 – including Fresnillo, Glencore, and Anglo American
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There was also some optimism emanating from the UK GDP figures, which showed the economy expanding by more than expected in February at 0.5%
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But investors did a major u-turn and started to dump UK, German and French stocks an hour later after China announced retaliatory moves, raising tariffs on US goods to 125% from previous levels of 84%
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It’s been a roller coaster on European markets ever since Beijing’s announcement. The UK’s FTSE 100 is now the only major index in positive territory, trading up 0.8%, while the pan-European Stoxx 600 is down 0.5%, the French Cac 40 is down 0.7%, the German Xetra Dax is down 1.4% and Italy’s FTSE MIB is down 0.4%
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The US dollar index slipped to a three-year low, falling as much as 1.2% to 99.50, and US Treasuries continued a sell-off, with yields on the 10-year note jumping to 4.4% and is on course for its largest weekly rise since the early 2000s
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And US stocks slipped at the start of trading. The S&P 500 was down 6 points or -0.1% at 5,262 points, the Dow was down 64 points or -0.16% at 39,529 points, while the Nasdaq was down 9 points or -0.06% at 16,377 points
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In corporates, JP Morgan put aside $973m in Q1 to help protect the bank from potential defaults by its borrowers amid a worsening economic outlook. It’s a sharp shift from last year, when a brighter outlook meant it released $72m from its reserves. It comes amid concerns that customers could struggle to repay their loans if new sweeping tariffs end up harming economic growth
BlackRock CEO Larry Fink has told CNBC that the US is “very close, if not in a recession”, Reuters reports.
The boss of the American asset manager has also told the business broadcaster that the US needs a trading agreement with China, adding: ‘this is not a pandemic, this is not a financial crisis, this is something that we’ve created’
As for the bond market reaction, Fink says it’s a sign that investors don’t believe the US Federal Reserve will have the ability to do any real easing.
US stock markets slip at the open
Wall Street is open and US stock are down at the start of trading.
Across the main indexes, the S&P 500 is down 6 points or -0.1% at 5,262 points, the Dow is down 64 points or -0.16% at 39,529 points, while the Nasdaq is down 9 points or -0.06% at 16,377 points.
House of Commons to be recalled to discuss British Steel nationalisation
Rowena Mason
BREAKING: Parliament is being recalled on Saturday to discuss the nationalisation of British Steel, according to sources.
The move has been taken after the failure to reach a deal to keep two blast furnaces going at British Steel’s Scunthorpe plant, owned by the Chinese company Jingye.
The Commons is expected to sit at 11am, with MPs called back from Easter recess to discuss taking the assets into public ownership in order to preserve steelmaking in the UK.
British Steel makes the vast majority of UK rail track and the government has been seeking a deal on keeping the plant open.
The industry is due to be hit by a 25% tariff on steel exports to the US imposed by Donald Trump.
Our main story will be updated shortly here:
Keep an eye on the latest developments in our Politics Live blog:
The sell-off in US Treasuries has continued, with yields on short and long-term bonds still on the rise.
The yield on 10-year note has jumped to 4.4% and is on course for its largest weekly rise since the early 2000s. That compares with 4.1% at the start of the week on 7 April, and 3.99% last Friday.
Long-term yields are also up, with the 30-year at 4.9%.
Some are debating whether angered Beijing may be behind the moves.
Richard Hunter, head of markets at interactive investor, said:
The latest lurch down followed US confirmation that the cumulative tariff rate on China was now 145%, leading to more widespread selling of Treasuries with the concomitant rise in yields, such as the 10-year note which jumped to 4.4% and is on course for its largest weekly rise since the turn of the century.
There is also some speculation that the US moves have resulted in some unintended consequences, with the possibility that a proportion of the selling is actually coming from China, who are moving out of their Treasury exposure.
Sam Jones
Speaking on Friday at the end of a visit to Vietnam and China designed to “boost Spain’s presence in Asia”, the Spanish prime minister, Pedro Sánchez, said the time had come to expand horizons and to keep trade open, the Guardian’s Madrid correspondent Sam Jones reports.
Sanchez said:
Asia is a continent that’s becoming a bigger and bigger player at a time of profound changes in the international order.
Spain is aware that we’re living through a complicated period in international relations, a period that requires us to expand our horizons, redouble our efforts to maintain the peace and to maintain openness, and to keep making progress when it comes to the big global challenges that don’t end at our borders.
Spain buys about €45bn of goods every year from China, its fourth-largest trading partner, but sells around €7.4bn worth.
Sanchez said:
Both Spain and Europe have a significant trade deficit with China that we must work to rectify.
But, he added:
We must not let trade tensions stand in the way of the potential growth of the relationship between China and Spain and between China and the EU.
The Socialist prime minister has visited China three times in just over two years.
He broke with the rest of the EU on his last trip to China in September 2024, urging the bloc to reconsider plans to impose high tariffs on Chinese electric cars and calling for a “fair trade order”.
JP Morgan sets aside $973m for potential defaults amid worsening economic forecasts
JP Morgan has put aside $973m in the first quarter to help protect the bank from potential defaults by its borrowers amid a worsening economic outlook.
It’s a sharp shift from last year, when a brighter outlook meant it released $72m from its reserves.
It comes amid concerns that its borrowers, which range from everyday consumers to large businesses, could struggle to repay their loans if new sweeping tariffs end up harming economic growth.
The additional build-up of its so-called net reserves include $549m for potential defaults on business loans, and $441m to cover the potential souring of consumer loans.
Photograph: Mike Segar/Reuters
It took the overall sum put aside for credit losses in the quarter to $3.3bn, up from the $1.9bn that JP Morgan put aside for potential losses a year earlier.
JP Morgan still managed to report a 9% rise in first quarter profits, thanks to higher fees from deal making and a record performance in equity trading.
However, the figures reflect the January-March period, before Trump triggered the tariff war that has roiled financial markets and put business deals on ice.
Commenting on the results, JP Morgan’s CEO Jamie Dimon said:
The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and “trade wars,” ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility.
As always, we hope for the best but prepare the firm for a wide range of scenarios.
A number of companies are looking to expand or set up shop in the US to try avoid Trump’s sweeping tariffs.
Here’s a useful round-up put together by reporters at Reuters:
A large number of electronics and tech firms are looking to up their US operations, including Samsung, which said it was moving manufacturing of dryers from Mexico to its plant in South Carolina.
LG Electronics, too, is considering moving the manufacturing of refrigerators from Mexico to its factory in Tennessee, a South Korean newspaper reported in January. Taiwanese chipmaker TSMC has said it is expanding investment in the US, planning to build five chip facilities there in coming years, its CEO said in March.
A number of Italian companies are putting together contingency plans.
That includes spirits group Campari, which is said last month that it was assessing opportunities to expand US production. Italian premium coffee maker Illy Caffe, said at the start of April that it will look at building a plant in the US if it gets caught up in tariffs.
Rival coffee maker Lavazza, said last week that it would press ahead with US expansion. The company, which produces locally around half of what it sells in the U.S., plans to increase this output to 100%.
Elsewhere, luxury conglomerate LVMH – which owns brands like Dior, Louis Vuitton, and Givenchy – is “seriously considering” bulking up its US production capacities, its CEO said in January.
The Swiss drugmaker plans Novartis is to spend $23bn (£17.5bn) to build and expand 10 facilities in the US, it said on April 10. Another Swiss firm, hygiene product maker Essity, could also move more of its production to the US from Mexico and Canada, its CEO said.
This is all on top of the raft of motor manufacturers, which are among the hardest hit by the growing trade war.
BMW is considering adding shifts to its Spartanburg plant in South Carolina to boost output by up to 80,000 units, company executives said on April 10. Honda will produce its next-generation Civic hybrid in Indiana, instead of Mexico, people familiar with the matter told Reuters in March.
Japan’s Nissan said it was considering shifting some domestic production of US-bound vehicles there, while Hyundai plans to further localise production in the US and make hybrid vehicles at its new factory in Georgia.
Chrysler’s parent company Stellantis said it was also moving forward with plans to build a new midsize pickup truck in Belvidere, Illinois.
