The trade war is definitely on – for the most part. After spooking global markets, sending M1 Brent sub-$60/bbl for the first time since March 2021 and 10-year yields rallying, US President Donald Trump announced a 90-day “PAUSE” and discounted reciprocal tariffs for all countries that have not retaliated against the US. In line with this, the US has now placed a 125% tariff on China, effective immediately. China swiftly levied an 84% counter-tariff on the US and hinted at further countermeasures. Uncertainty remains high in the market, although President Trump’s tariff postponement provided a floor to an otherwise freely falling Brent, with the M1 futures standing at $63/bbl at the time of writing. Still, the escalating trade conflict between the two largest consumers of oil injects substantial uncertainty over oil demand growth. Sentiment was also hit by an EIA-reported build of 2.6mb in the week ending 4 Apr. In positive news, US inflation declined by 2.4% y/y in March (prev: 2.8% y/y, est: 2.5% y/y). It will, however, be interesting to see how post- “Liberation Day” inflation readings print in the coming months. For now, it’s safe to say that sentiment is very much still in the trenches.
