Market Talks covering the impact of U.S. Politics and White House policies on companies and markets. Published exclusively on Dow Jones Newswires throughout the day.

0748 ET - Following conversations with government bond trading desks, TwentyFour Asset Management has found no definitive answers as to what caused the U.S. Treasury selloff, says Felipe Villarroel in a note. "The most popular reason cited has been the unwinding of 'basis trades'," the partner in portfolio management says. This involves traders having to sell U.S. Treasurys to meet margin calls on leveraged positions that were initiated with the objective of arbitraging small price differences between U.S. Treasurys and UST futures or interest rate swaps, he explains. "The huge volumes involved have caused a cascading effect where suddenly a lot of bonds needed a new home while buyers were too nervous to catch a falling knife in the most volatile week in recent memory." (emese.bartha@wsj.com)

0741 ET - Gold futures slip, but hold near record highs on safe-haven demand and dollar weakness. Futures are down 0.2% at $3,239.0 a troy ounce, near Friday's record high of $3,263/oz. The precious metal has been supported by a jump in ETF inflows, a weaker greenback, and investors shifting to safe-haven assets amid market turmoil, SP Angel analysts say in a note. A sharp selloff in the long end of the U.S. Treasury curve has also likely triggered additional gold purchases, SP Angel says. Gold and Treasurys usually compete for safe-haven status, and investors are likely cutting Treasury positions in favor of gold given concerns over the U.S. economy, SP Angel writes. (joseph.hoppe@wsj.com)

0738 ET - Tensions with China and the possibility of recession should keep investors interested in defense, Vertical Research Partners says. The U.S. administration's China strategy is likely to sustain modest budget growth for the defense department going forward, Vertical says. In addition, the trade war is likely to result in slower global GDP growth, so the defense sector will look relatively more attractive to investors versus more cyclical names. Vertical shifts to a more positive stance on defense, and reinstates BAE Systems as its top investment pick in the sector. (by alistair.macdonald@wsj.com )

0728 ET - The dollar is likely to extend its losses unless there is a much bigger global shock that prompts safe-haven flows to return to the U.S. currency, Monex Europe analysts say in a note. Uncertainty remains heightened after contradictory remarks from U.S. officials about tariffs at the weekend, they say. This leaves dollar risks "skewed to the downside" at least in the short term. The dollar should continue trading lower "unless and until the uncertainty begins to crystallize meaningfully, or something significant breaks." The DXY dollar index falls 0.6% to 99.4730 after hitting a three-year low of 99.0140 Friday. (renae.dyer@wsj.com)

0718 ET - Publicis Groupe's Sapient consulting looks less likely to stage a turnaround now than it did two months ago given that economic and tariff uncertainty changed market conditions, Barclays's Julien Roch says in a research note. The focus for the French advertising group's 1Q update will be on organic net revenue growth and its full-year outlook, as well as on any comments around clients cutting or pausing spending due to uncertainty, the analyst says. The company is likely to confirm guidance for organic growth of 4% to 5% for 2025, Barclays says. "Market conditions have clearly changed so any commentary around client spend/sentiment should be followed closely. This particularly pertains to Sapient, which has performed poorly recently," the analyst says. Shares rise 3%. (adria.calatayud@wsj.com)

0713 ET - Stellantis needs to think about deep cuts in the global production network as shipments continue to decline, Citi analysts write. The bank believes Stellantis is slowly mending its relationships with global stakeholders, but underlying shipments have remained weak and these are a prerequisite for stabilizing the company, it adds. First-quarter shipments fell by 117,000 units, or 9%, to 1.22 million cars. This is around 60,000 units below Citi estimates, led by a 20% drop in North America and 8% in Europe. First-quarter 2021 sales were at 1.6 million and first-quarter 2019 at 1.9 million units. "Apart from weak U.S. sales and pricing adjustments, U.S. import tariffs on RAM pickup truck production in Mexico remain the key overhang." Shares rise 4.5%. (dominic.chopping@wsj.com)

0659 ET - Stellantis has been hit harder by auto tariffs than its Detroit peers, making it impossible to be confident on a U.S. turnaround, UBS analyst Patrick Hummel writes. Around 35% of Stellantis vehicles sold in the U.S. are imported, UBS says. In addition, after several quarters of severe market share loss, the company's aggressive plan to regain share in a likely shrinking U.S. market now has a lower likelihood of success, it adds. "Unlike Ford and GM, we see a high probability of losses in North America and a negative free cash flow." UBS downgrades the company to neutral from buy and lowers its price target to 8.80 euros from 16 euros. Shares rise 3.9% to 7.97 euros. (dominic.chopping@wsj.com)

0654 ET - The prospect of the U.S. reversing tariffs on European exports has boosted appetite for European assets, resulting in cheaper euro credit default swaps which act as insurance against default. "European markets outperformed on speculation that more tariff reversals could follow," IG analysts say in a note. The iTraxx Europe Crossover index which tracks euro junk bond credit default swaps falls 12 basis points to 379bps, S&P Global Market Intelligence data show. The iTraxx Europe Main index which tracks euro investment-grade credit default swaps falls 3bps to 74bps. (miriam.mukuru@wsj.com)

0642 ET - The U.S. administration's latest update on tariffs is a big relief for Apple, JPMorgan analysts write in a note. The Trump administration announced a temporary exemption for some tech products from the so-called reciprocal tariffs. These exemptions are expected to boost investor confidence regarding a potential direct impact on costs for the hardware industry, including Apple, the analysts say. However, the tech company's shares are unlikely to return to near-term peaks immediately given the remaining concerns, they add. Apple shares are up 4.9% premarket at $207.89. (najat.kantouar@wsj.com)

0615 ET - CreditSights analysts upgrade their recommendations on the corporate bonds of Toyota and Honda to market perform from underperform, mainly based on relative value and expectations that the effects of tariffs "will be manageable." Ford credit is upgraded to outperform from market perform. A likely S&P downgrade to BB+ "is reflected in spreads at current levels and we would expect spread tightening on a downgrade," the analysts say in a note. High-yield investors are likely to demand Ford credit upon a downgrade, causing credit spreads to tighten, they say. (miriam.mukuru@wsj.com)

0611 ET - The Bank of Canada's interest-rate decision Wednesday will likely have less impact on the Canadian dollar than it usually does as U.S. tariffs dominate market moves, MUFG Bank's Derek Halpenny says in a note. "The traditionally reliable driver of foreign exchange, the rates spread link, has completely broken down as the U.S. dollar suffers from a loss of confidence," he says. The two-year Canada-U.S. swap rate spread implies the U.S. dollar should be trading around 1.4300 Canadian dollars. The exchange rate falls 0.2% to a five-month low of 1.3829 as the dollar weakens, according to FactSet. The market is pricing in a 58% chance that the BOC will leave rates unchanged Wednesday and a 42% chance of a rate cut, according to LSEG. (renae.dyer@wsj.com)

0607 ET - U.S. tariffs are expected to weigh on the global economy and result in slower oil demand growth this year, according to UBS. "Some indicators [...] suggest that the oil market remains tight, but tariffs together with the ongoing uncertainty over the U.S. administration's next steps are likely to weigh on economic growth," strategist Giovanni Staunovo says. The bank lowered its global oil demand growth forecast for this year by 400,000 barrels a day to 800,000 barrels a day, and said it now expects an oversupply of 400,000 barrels a day from 100,000 barrels a day previously. Brent crude is forecast at an average of $68 a barrel from previous expectations of $80 a barrel, but UBS says it could fall to a $40-$60 range over the coming months if the trade war between the U.S. and China escalates further. (giulia.petroni@wsj.com)

(END) Dow Jones Newswires

April 14, 2025 07:49 ET (11:49 GMT)

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