US President Trump announced 100% tariffs on Pharmaceuticals, 50% tariffs on all Kitchen Cabinets, Bathroom Vanities, and associated products, a 30% tariff on Upholstered Furniture, and a 25% tariff will be imposed on all “Heavy Trucks” made in other parts of the world.
European bourses seemingly shrug off Trump’s latest barrage of tariffs; US equity futures trade tentatively into US PCE.
USD rally pauses for breath ahead of PCE; EUR unmoved by ECB Survey of Consumer Expectations, which saw the 1- and 5-year forecasts rise.
Crude is slightly lower in very quiet trade, XAU/USTs are rangebound awaiting data.
Looking ahead, US PCE (Aug), US University of Michigan Final (Sep), Fed’s Barkin, Bowman.
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TRADE/TARIFFS
FRESH TARIFFS
US President Trump said that as of October 1st, 2025, a 25% tariff will be imposed on all “Heavy Trucks” made in other parts of the world, according to Truth Social.
US President Trump said that as of October 1st, 2025, the US will impose a 50% tariff on all kitchen cabinets, bathroom vanities, and associated products, and a 30% tariff on upholstered furniture, according to Truth Social.
US President Trump said that as of October 1st, 2025, the US will impose a 100% tariff on any branded or patented pharmaceutical product unless the company is building its pharmaceutical manufacturing plant in America, according to Truth Social.
The Trump administration is reportedly weighing a new plan to dramatically reduce the US’ reliance on semiconductors made overseas, according to WSJ sources. Companies that do not maintain a 1:1 ratio over time would have to pay a tariff, sources said.
US-CHINA
US President Trump signed an executive order on TikTok, saying he had good talks with Chinese President Xi and that China is fully on board. He noted that American investors will take over the platform, with TikTok investors to include Ellison, Michael Dell, and Rupert Murdoch. Trump said he is satisfied with security concerns, praised Xi’s approval, and highlighted that Oracle (ORCL) is playing a very big part, according to Reuters.
US Vice President Vance said TikTok will be valued at around USD 14bln, adding that Americans will control the algorithm and that he wants it to be fair, according to Reuters.
In a sign of the fragile engagement, people close to the White House said Trump has not committed to going to Beijing, with a firm date for the visit contingent on China’s continued cooperation on issues ranging from trade to fentanyl, according to WSJ.
US Deputy Secretary of State confirmed a meeting with her Chinese counterpart took place on Thursday evening, according to Reuters.
OTHERS
Japanese Finance Minister Kato announced the establishment of a facility at JBIC for the Japan and US-bound USD 550bln investment package, according to Reuters.
Japan’s Tariff Negotiator Akazawa said Japan and the US agreed that US semiconductor and pharmaceutical tariffs on Japan will not exceed those applied to other countries, adding that both sides will continue to evaluate how the new tariffs relate to the existing US-Japan agreement, according to Reuters.
Turkey’s Erdogan says steps to facilitate trade, including revising tariffs, were discussed with US President Trump.
EUROPEAN TRADE
EQUITIES
European bourses (STOXX 600 +0.2%) are modestly firmer across the board and have traded with a slight upward bias throughout the morning. The region has seemingly shrugged off the latest barrage of tariff levies announced by Trump, but with some analysts suggesting that the pharma-specific ones are not as bad as feared.
European sectors hold a strong positive bias, with only a couple of sectors marginally lower. Most of the focus this morning has been on the latest Trump tariffs, where he announced 100% tariffs on Pharma, 50% on kitchen cabinets, and 25% on heavy trucks.”; for the latter, Daimler Truck (-2.5%) moves lower, whilst Volvo (+3%) remains in the green. Bernstein writes that Daimler Truck could be most affected by these tariffs, given its high exposure to the US; analysts add that Paccar (+5% pre-market) stands to benefit the most.
Delving into the pharma tariffs, some analysts have suggested the announcement may actually provide some relief for traders; focus is on the caveat that a Co. will not be subject to the tariff rate if they are building a pharma plant in the US. So, whilst the sector was initially underperforming, some heavyweights have managed to climb out of negative territory – namely those which have already announced plans for plants in the US; Roche (+0.2%), AstraZeneca (U/C). Jefferies writes that “overall, we think this is a win for Pharma and shouldn’t have a material impact”. In US pre-market trade, the likes of Eli Lilly (+1.7%) and Viking (+1.4%) both move higher.
US equity futures (ES U/C, NQ -0.1%, RTY -0.1%) are trading on either side of the unchanged mark, with price action tentative into US PCE.
Microsoft (MSFT) named top pick at Morgan Stanley; price target raised to USD 625 from USD 582
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FX
After two sessions of solid gains for DXY, the rally has paused for breath. Whilst the price action on Wednesday left many desks scratching their heads, yesterday’s upside was clearly driven by US data; Q2 GDP, weekly claims and durables. ING adds that the surge in the USD has likely also been assisted by positioning. The next potential inflection point for the USD comes via today’s PCE data with Y/Y core PCE expected to hold steady at 2.9% (a view backed by Powell earlier this week) and the M/M rate seen declining to 0.2% from 0.3%. Tariff headlines have re-emerged over the past 24 hours with focus on pharma, furniture and several other sectors. However, the vague language around the pharma actions has seen equity indices take the news in their stride. DXY has ventured as high as 98.53 but has been unable to test Thursday’s best at 98.60.
EUR is a touch firmer vs. the USD after a couple of bruising sessions, which have seen the pair pull back from a 1.1820 peak on Wednesday to a 1.1645 low yesterday. Price action has largely been driven by the USD rather than anything EUR-specific. This morning’s ECB SCE saw little follow-through into EUR, with the report seeing a 20bps pick-up in the 1yr inflation forecast to 2.8% and the 5yr projection rise to 2.2% from 2.1%. EUR/USD inched above its 50DMA at 1.1679.
JPY is flat vs. the USD after a recent run of losses, which have seen USD/JPY rise from a 147.51 base on Wednesday to a current session peak @ 149.95, taking out its 50 and 200DMAs in the process. Price action for the pair has largely been dictated by interest rate differentials as a combination of cautious Fed speak and strong US data has supported US yields. From the Japanese side of the equation, soft Tokyo inflation metrics overnight have also added to the trend, with the pair now eyeing a potential test of 150 to the upside.
GBP is attempting to atone for recent losses vs. the USD, which have seen Cable slip from a WTD peak on Tuesday at 1.3537. This week has been a quiet one from a UK perspective, aside from a disappointing flash PMI report on Tuesday, which was hampered by ongoing angst surrounding the upcoming UK budget on November 26th.
Antipodeans are broadly steady vs. the USD with both pairs pausing after the prior day’s heavy selling. Newsflow and data were light during APAC hours, though a pullback in copper kept AUD capped.
PBoC set USD/CNY mid-point at 71152 .vs exp. 7.1439 (Prev. 7.1118)
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FIXED INCOME
USTs are in a very thin 112-07 to 112-13+ band awaiting a packed US docket. Focus lies on US PCE where headline is seen at 0.3% (prev. 0.2%) M/M with the core at 0.2% (prev. 0.3%) M/M, following PPI and CPI desks looked for the core figure between 0.28-0.35%. Fed speak thereafter from Barkin (2027) and Bowman (voter), followed by the latest AtlantaFed GDP Now, at 3.3% for Q3 as of September 17th.
Bunds are contained as we look to US data and Fed speak (see USTs). Bunds spent the morning towards lows of 127.89 before picking up modestly as the general risk tone came off initial highs. Action that has taken the benchmark to a 128.13 peak, with gains of around 10 ticks at best. No move to the latest ECB Consumer Expectations Survey. The one- and five-year inflation views were increased while the three-year horizon was maintained.
Gilts are flat. UK specifics are very light so far. Domestic politics is increasing in focus as PM Starmer comes under increasing pressure from figures within the broader Labour Party. On this, next week’s party conference will draw significant attention, but before that at 11:00BST, Starmer will be speaking on “patriotic renewal”. That aside, Gilts likely to conform to the lead from USTs given the busy afternoon of US events. As it stands, the benchmark is near enough unchanged in 90.26-52 confines.
Italy sells EUR 6bln vs exp. EUR 5-6bln 2.85% 2031, 3.60% 2035 BTP, EUR vs exp. EUR 1-1.25bln 4.00% 2035 BTP Green & EUR 1.5bln vs exp. EUR 1-1.5bln 2034 CCTeu.
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COMMODITIES
WTI and Brent remained balanced after another day of gains, making highs at USD 65.34/bbl and USD 69.68/bbl respectively on Thursday. This morning, the benchmarks surpassed those peaks by c. USD 0.05/bbl early in the session before falling back into yesterday’s range. As it stands, WTI and Brent are trading near session lows of USD 64.99/bbl and USD 69.37/bbl respectively. Newsflow very light this morning.
Spot gold continues to trade rangebound amid recent dollar strength and into a packed US agenda, currently within USD 3,734-3,755/oz parameters. A consolidation just off its USD 3791/oz ATH, after an aggressive move which started at the end of August with XAU is up nearly 13% since then. Markets are awaiting US Core PCE later today, the Fed’s key measure of inflation.
3M LME copper is a little lower today. After making a high at USD 10.48K/t, copper prices fell back and closed the day down 0.5% in Thursday’s session. Action on Thursday was initially a continuation of the Grasberg-induced gains, before being added to by updates from China. On Grasberg, the Indonesian Mining Minister said production at Freeport’s mine has not resumed following disruption earlier in the week. As a reminder, that site accounts for around 3% of global supply.
Iraq is in talks with Vitol to handle crude oil sales once Kurdish pipeline restarts, according to Bloomberg.
A force majeure notice was issued at three French LNG terminals due to a power sector strike; strike blocking ship reception at all terminals, says Reuters citing Elengy.
Indonesia Mining Minister says production at Freeport (FCX) has not resumed, stoppage affects output and revenue; spoke with Freeport about extending the mining permit to past 2041.
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NOTABLE DATA RECAP
Italian Mfg Business Confidence (Sep) 87.3 vs. Exp. 87.5 (Prev. 87.4, Rev. 87.3); Italian Consumer Confidence (Sep) 96.8 vs. Exp. 96.5 (Prev. 96.2)
NOTABLE EUROPEAN HEADLINES
Italy’s Economy Minister said the digital euro plan will take two years to be implemented, according to Reuters.
Volkswagen (VOW3 GY) cut output and paused production at its German EV plants, according to Bloomberg.
French PM Lecornu’s interview is now expected to be published within Saturday’s edition of Le Parisien, via Politico; delayed due to an editorial strike.
ECB SCE: 1yr and 5yr inflation forecasts rise. Inflation: 1yr: 2.8% (prev. 2.6%) 3yr: 2.5% (prev. 2.5%). 5yr: 2.2% (prev. 2.1%) Growth 1yr: -1.2% (prev. -1.2%).
NOTABLE US HEADLINES
US President Trump called on the Fed to lower rates again, saying the US is the only country where strong numbers are reported and stocks still go down.
US President Trump said there could be a government shutdown.
Meta (META) is reportedly set to face a charge sheet from the EU for failing to adequately police illegal content, risking fines for violating the bloc’s content moderation rulebook, according to Bloomberg.
Oracle (ORCL), Silver Lake, and MGX will be the main investors in TikTok US with a combined 45% ownership, according to CNBC’s Faber, citing sources.
Meta (META) is reportedly in talks with Alphabet’s Google (GOOGL) to integrate Gemini for enhanced ad-targeting capabilities, according to The Information.
Punchbowl surmises, on the US shutdown situation, that “with just four days until government funding runs out, both Republicans and Democrats seem unnaturally comfortable with their positions in the fight.”
GEOPOLITICS
NATO
European officials privately told Russia they are ready to shoot down jets and view Russia’s Estonia incursion as deliberate, according to Bloomberg.
French President Macron said France stands ready to support Denmark in assessing the situation and contributing to the security of Danish airspace, according to X.
RUSSIA-UKRAINE
US President Trump said Ukraine has a shot at getting territory back and that Russia is doing poorly, adding that he is dissatisfied with what Russian President Putin is doing, according to Reuters.
IAEA said a drone was downed and detonated around 800 metres from the perimeter of Ukraine’s South nuclear power plant overnight, noting that 22 UAVs were observed late last night and this morning and that its team heard gunfire and explosions, according to Reuters.
US President Trump said he believes Turkey will halt purchases of Russian oil, adding that it is harder for Hungary and Slovakia as they are landlocked with one pipeline, according to Reuters.
MIDDLE EAST
US President Trump said he had good talks on Gaza and really good talks with Israeli PM Netanyahu, adding that a hostage deal could happen soon, according to Reuters.
US President Trump said he will not allow Israel to annex the West Bank, according to Reuters.
Iranian Foreign Minister says agreement with IAEA will be valid as long as there is no ‘hostile action taken against Iran’, including re-instatement of UN sanctions.
Turkeys’ Erdogan says he discussed with US President Trump steps to improve defence cooperation, supports Trump’s vision of global and lasting peace in Gaza and Palestine.
OTHERS
US President Trump said he had good talks with Turkish President Erdogan and that the meeting was conclusive on many things, according to Reuters.
South Korea fired warning shots at a North Korean commercial vessel for crossing the maritime border, according to Yonhap.
Iran and Russia have come to a USD 25bln agreement to construct four nuclear power plants in Iran, via IRNA.
CRYPTO
Bitcoin is on the backfoot today and trades shy of the USD 110k mark.
APAC TRADE
APAC stocks traded mostly lower after being subdued for a bulk of the session following a similar performance stateside after hot US data, with traders now looking ahead to the Fed’s preferred gauge of inflation. Sentiment in the region was hampered by US President Trump announcing tariffs of 100% on pharmaceuticals, 50% on kitchen cabinets, bathroom vanities and associated products, 30% on upholstered furniture, and 25% on all heavy trucks made outside the US.
ASX 200 eventually eked out mild gains, but the healthcare sector was the biggest laggard after Trump’s 100% tariff announcement on pharmaceuticals. Tech also weakened, though losses were cushioned by outperformance in metals and mining.
Nikkei 225 was modestly softer but held above the 45,500 level after briefly dipping below, with pharma stocks weighing following Trump’s tariff announcement, and with little follow-through from softer-than-expected but prior-matching Tokyo CPI data.
Hang Seng and Shanghai Comp largely conformed to regional losses, with little follow-through from Trump signing the executive order on TikTok, in which he also noted he had good talks with Chinese President Xi, although the Mainland later oscillated on either side of the unchanged mark.
KOSPI was the regional laggard, heavily pressured by the tech sector and pharma, whilst reports also suggested South Korea fired warning shots at a North Korean commercial vessel for crossing the maritime border, according to Yonhap.
Nifty 50 was also subdued with the nation’s pharma stocks pressured after President Trump’s tariff announcement.
NOTABLE ASIA-PAC HEADLINES
Japanese government revised July real wages to -0.2% vs preliminary estimate of +0.5%, according to Reuters.
Japanese Finance Minister Kato said he will not comment on FX levels, according to Reuters.
India’s government has drafted a proposal to relax foreign investment rules for e-commerce exports, according to Reuters.
PBoC injected CNY 165.8bln via 7-day reverse repos with the rate at 1.40%; injected CNY 400bln via 14-day reverse repo.
DATA RECAP
Japanese CPI Tokyo Ex fresh food YY (Sep) 2.5% vs. Exp. 2.8% (Prev. 2.5%)
Japanese CPI, Overall Tokyo (Sep) 2.5% (Prev. 2.6%, Rev. 2.5%)
New Zealand ANZ Roy Morgan consumer confidence 94.6 (prev. 93.2)
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