Markets get clobbered on tariff whiplash and fatigue

Dow settled down 427 after limited buying into the close trimmed losses, decliners over advancers 5-2 & NAZ tumbled 483.  The MLP index fell 4+ to the 308s & the REIT index sank 9+ to 410.  Junk bond funds remained slightly higher & Treasuries had limited selling which allowed yields to rise.  Oil crawled higher in the 66s & gold was off 2 to 2923 (more on both below).

Dow Jones Industrials

The US trade deficit widened to a record in Jan as companies scrambled to secure goods from overseas before Pres Trump imposed tariffs on America’s largest trading partners.  The gap in goods & services trade widened 34% from the prior month to $131B, Commerce Dept data showed.  The deficit was larger than all but 1 estimate in a survey of economists.  The value of imports rose 10% to a record $401B, while exports increased 1.2%.  The figures aren't adjusted for inflation.  Trump promised sweeping tariffs during the 2024 presidential campaign, & on Tues he handed down sweeping 25% duties on Canada & Mexico while doubling tariffs on Chinese goods to 20%.  Canada & China immediately announced retaliatory measures & Mexico is responding on Sun.  Trump said yesterday he's exempting automakers from newly imposed tariffs on Mexico & Canada for 1 month as a temporary reprieve following pleas from industry leaders.  But Canadian Prime Minister Justin Trudeau is not open to lifting full package of retaliatory duties if Trump leaves any tariffs on Canada in place.  Canada's trade surplus with the US jumped to a record at the start of the year, driven by exports of cars, auto parts & oil, separate data from Statistics Canada showed today.

US trade deficit surged to record ahead of Trump tariffs

Pres Trump announced that he would exempt Mexico from tariffs on goods under the US–Mexico–Canada Agreement (USMCA) until Apr 2.  He announced the extension in a post to Truth Social following a conversation with Mexican Pres Claudia Sheinbaum Pardo.  "After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement," Trump wrote.  "This Agreement is until April 2nd. I did this as an accommodation, and out of respect for, President Sheinbaum.  Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the US &, likewise, stopping Fentanyl. Thank you to President Sheinbaum for your hard work and cooperation!"  Sheinbaum Pardo thanked Trump for the extension.  "Many thanks to President Donald Trump. We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties," she wrote in Spanish.  "We will continue working together, particularly on issues of migration and security, which include reducing the illegal crossing of fentanyl into the United States, as well as weapons into Mexico. As President Trump mentions, Mexico will not be required to pay tariffs on all those products within the T-MEC. This agreement is until April 2, when the United States will announce reciprocal tariffs for all countries."  A White House official said that "President Sheinbaum presented President Trump with tangible evidence that there’s been [an] increase in fentanyl seizures in the last 30 days and demonstrated real commitment to focus on curtailing cartels and drug trafficking."

Trump halts tariffs on some Mexican products after talking to country's president

President Donald Trump’s sanctions against Iran are designed to shut down the country's oil industry & “collapse its already buckling economy,” Treasury Secretary Scott Bessent said.  The US is deploying sanctions against Iran aggressively for “immediate maximum impact,” Bessent said.  Trump’s goal is to slash Iran's oil exports of 1.5M barrels per to a trickle, the Treasury secretary said.  “We are going to shut down Iran’s oil sector and drone manufacturing capabilities,” Bessent added.  The administration also intends to cut off Tehran's access to the intl financial system, he said.  Prices for US crude oil & the global benchmark Brent turned positive after Bessent's comments.  West Texas Intermediate rose 6¢ to $66.37 per barre while Brent gained 16¢ to $69.46.  “Making Iran broke again will mark the beginning of our updated sanctions policy,” the Treasury secretary, a former global investment manager, said.  “If I were an Iranian, I would get all my money out of the rial now,” he said.  Trump re-imposed his pressure campaign on Iran thru a presidential memorandum on Feb 4.  2 days later, the Treasury Dept started imposing sanctions on an intl network shipping Iranian oil to China.  Oil prices fell to multiyear lows on yesterday as Trump's tariffs against Canada, Mexico & China raised fears among investors that economic growth will slow & crude demand will falter. OPEC+ also confirmed this week that it will gradually bring 2.2M barrels per day back to the market starting in Apr.

U.S. will collapse Iran’s economy by shutting down its oil industry, Treasury Secretary says

Gold prices fell about 1% as investors booked profits after a 3-day rally, with markets eyeing US jobs data for clues on the Federal Reserve's interest rate path amid rising global trade tensions.  Spot gold, which was down 0.5% at $2904 an ounce has gained more than 10% this year.  It hit a record high of $2956 on Feb 24.  US gold futures also fell 0.5% to $2912.  Market focus is on the escalating global trade war after the US imposed 25% tariffs on imports from Mexico & Canada on Tues along with new duties on Chinese goods.  Asian shares rose as investors hoped trade tensions could ease after Pres Trump exempted some automakers from tariffs for a month.  Investors are turning to gold as a safe haven asset as geopolitical & economic uncertainty looms.

Gold Prices Fall On Profit-Taking, US Data In Focus

Oil prices were steady after falling for the past 4 sessions as US tariffs on Canadian crude supplies are likely to be eased, but investors remain wary of remaining tariffs on Mexico & major producers' plans to increase output.  Brent crude futures were trading up 42¢ (0.6%) at $69.72 a barrel while US West Texas Intermediate (WTI) crude was up 40¢ (0.6%) at $66.71 a barrel.  Brent has plunged 6.5% in the previous 4 sessions, falling to its lowest since 2021 on Wed, while WTI has dropped 5.8% over the same period to its lowest since May 2023.  Prices fell after the US imposed tariffs on Canadian & Mexican trade, including energy imports, at the same time major producers decided to raise output quotas for the first time since 2022.  The decline eased as the US said it would exempt automakers from 25% tariffs, raising optimism the impact of the trade dispute could be mitigated.  In addition, sources familiar with the discussions said Pres Trump could remove a 10% tariff on Canadian energy imports, such as crude oil & gasoline, that comply with existing trade agreements.  Tariffs also remain in place on Mexican crude oil imports from the US, a smaller supply stream than Canadian crude but an important flow for US refineries on the Gulf Coast.

Oil Prices Steady After Days Of Declines, But Traders Wary Of Tariffs, Supply Impact

Stocks tanked to session lows after more tariff whiplash from the Trump administration.  Trade-war uncertainty has persisted as investors weighed how far Pres Trump would be willing to negotiate on tariffs.  Today, Trump said he would pause tariffs on some Mexican goods & the White House later said the delay also includes goods from Canada.