Morning Bid:'Major loser' reporting for duty

It’s not clear if Trump has the authority to remove Powell before his term is up next year. Even if he were successful in doing so, the way the Fed is structured means the remaining board members and regional bank presidents still set monetary policy.

Trump’s initial social media post last week criticising Powell barely caused a ripple across markets, which were very much in recovery mode, attempting to find some kind of stability after the two-week roller coaster of early April.

But his post on Monday, in which he warned the economy would slow unless Powell cut rates, hit a market with very little in the way of liquidity – given much of the world was off for the Easter break – stripping more than 2% off the S&P and the Nasdaq, hitting Treasury prices and the dollar.

“With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump’s post said.

U.S. consumer inflation eased in March, thanks to declines in the price of gasoline and used vehicles. But tariffs are likely to raise the cost of most imported goods and could fuel a resurgence in price pressures. A recent measure of where consumers believe inflation will be in a year’s time shot to the highest since 1981.

Even if the legality of removing Powell is unclear and Trump’s verbal attacks amount to little more than that, it raises the question of the independence of the world’s most powerful central bank, striking another blow to confidence.

And if there is one thing sorely lacking right now, it’s confidence — confidence in U.S. markets.

Treasuries have been so badly battered this month that the premium investors demand to hold U.S. 10-year debt rather than German bonds has increased by 48 basis points so far in April to nearly 200 basis points, heading for its biggest monthly rise since June 2003, according to LSEG data.

Meanwhile, the S&P 500 has given up all its edge over the rest of the world. So far this year, the benchmark U.S. index has fallen 13%, while the MSCI All-World Ex-US index has risen 4.2%. There are worse performers out there. Tokyo’s Nikkei has fallen 14%, but this is partly a function of Japanese monetary policy and the performance of the yen. The S&P has just recorded its worst performance over the first four months of the year against the rest of the world, as measured by the MSCI index, since 1993.

There’s a clear “major loser” right now and it’s on Wall Street.

Chart of the day

Roche, the Swiss drugmaker, is the latest European company to announce plans to expand its presence, or set up shop, in the United States to mitigate the impact of Trump’s tariffs. The company says it will invest $50 billion in the U.S. over the next five years, which it says will create over 12,000 jobs. Once the new and expanded manufacturing facilities are online, Roche says it will export more medicines from the U.S. than it imports. Pharmaceutical exports are big business both for the European Union and the United States. Medicines and other pharmaceutical products accounted for almost a quarter of all EU exports to the U.S. in 2024.

Today’s events to watch

* Tesla first-quarter earnings after the market close

* Baker Hughes first-quarter earnings after the bell

* Federal Reserve Bank of Philadelphia President Patrick Harker, Richmond Fed President Thomas Barkin and Fed Board Governor Adriana Kugler speak at separate events.

* Richmond Fed Composite index for April

* Two-year Treasury note auction

(Reporting by Amanda Cooper; Editing by Aidan Lewis)