Bearish Momentum on USD intensifies
The dollar is nearing its lowest level in three years, with investors positioning for a growth shock from reciprocal tariffs between the US and the rest of the world
- The Bloomberg Dollar Spot Index’s Fear-Greed gauge, a measure that compares buying to selling strength, shows sentiment is near the most bearish since November 2022
Tariffs set to Trigger U.S. Supply Shock
Shein Group has increased the prices of its products in the U.S. while Temu, a Chinese shopping app, is passing nearly all of the new import tariffs introduced by Donald Trump onto American buyers, effectively more than doubling the price of certain items
- Since early April, cargo traffic from China to the U.S. has dropped by up to 60%, and thousands of businesses will need to restock by mid-May
- This sudden disruption in supply could result in empty store shelves, price spikes, and widespread job losses in sectors like trucking, logistics, and retail. Some experts are even warning of shortages similar to those seen during the Covid-19 pandemic
- Even if tensions ease, resuming trade across the Pacific won’t be smooth — it could bring new complications like port delays, congestion, and a flood of orders that could strain the system further
Blackout in Spain – Causes unknown
Spain and Portugal’s power supplies are back to 100% capacity following Monday’s blackout – root cause of the problem remains unknown
- Roughly 15 gigawatts of power vanished from the power grid in a few seconds right before the blackout around 12:35 pm on Monday – equal to 60% of national demand
- Portugal was importing electricity from Spain at that moment and therefore was also affected
- Red Electrica, Spain’s grid operator, has ruled out the possibility of a cyberattack but public officials were more cautious – investigation is ongoing to determine what happened and how to better protect the system in the future
- Power failure could inflict an immediate hit of about 0.5% from Spain’s quarterly GDP – some of it would be made up as energy supply is restored
Alphabet restarts European primary
Alphabet lead biggest rush in months to Europe’s primary bond market yesterday – with borrowers trying to take advantage of improved investor sentiment
- Alphabet aimed to generate 2.5 billion EUR from a debut sale of Euro bonds in an unusual five part deal
- Issuers included France, Carrefour and insurer Ethias SA with companies seeking nearly 17 billion EUR with 26 tranches of debt issued
- Sales come as companies view the opportunity given the recovery in the credit market – many company deals were put on hold given uncertainty generated by Trump’s trade announcements
- Robust demand was seen also in the US on Monday as 15 borrowers raised over 18 billion USD
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