If Boeing thought it could sweep its Boeing 737 MAX production cut under the rug with a late Friday announcement it failed: the company's decision to cut 737 production by 20% sent BA shares 4% lower in pre-market trading with a BofA downgrade to Neutral not helping, and hit the shares of its suppliers including Meggitt, Melrose and Safran, which all fell between 1 percent and 2.5 percent. More importantly, since Boeing is the biggest component of the Dow, futures on the 'industrial average' were lower, with the implied open down more than 100 points, while global market and government bonds also drifted lower as progress toward a trade deal between America and China continued to drag. Oil rose as fighting in Libya raised the risk of supply outages.

As a reminder, on Friday Boeing announced that 737 production will be cut to 42 airplanes per month from 52 starting in mid-April, without giving an end date. Investment bank Cowen said Boeing’s decision to cut the production of the 737 was the right thing to do. “The 737 rate cut to 42/month should help resolve the MAX crisis but with a large 2019 cash hit,” wrote Cowen in a note.

Boeing's latest woes did not help equity markets around the world, as last week's global stock rally hit the pause button with MSCI’s world equity index flat as potential flashpoints including a crucial Brexit summit and central bank meetings loomed, and investors began to look ahead to an earnings season that would usher in an earnings recession according to Morgan Stanley.

While Dow futures took the brunt of the hit due to Boeing's dominant position in the index, S&P 500 futs were also lower after the biggest US benchmark rounded out last week with gains that took it to a six-month high, while the Stoxx Europe 600 also nudged into the red. A rally in Shanghai fizzled out, and equities fell in Tokyo as the yen pushed higher.

China equity markets reopened after Friday's holiday with handsome gains, but they were wiped out by midday with traders awaiting more "optimism" from U.S.-China trade talks; as a result the Shanghai Composite closed 0.1% lower after rising as much as 1.3% earlier; ChiNext index slides 2.1% while the MSCI Asia Pacific index was little changed. Early optimism emerged after a document was published on the central government’s website late on Sunday, in which Beijing said it would step up a policy of targeted cuts to banks’ required reserve ratios to encourage financing for small and medium-sized businesses. Shares rose in Sydney and saw modest gains in Hong Kong.

Early trading in Europe was also muted, with German exports and imports both falling more than expected in February, the latest sign that Europe’s largest economy will likely have meager growth in the first quarter amid increased headwinds from abroad. European stocks slipped 0.2% in early trading, as the weak German data and investor caution ahead of a string of political and monetary policy events held the market back. However, since then the Stoxx 600 index has pared losses and turns slightly positive, as the euro climbs against the dollar ahead of the EU summit. Healthcare (+0.5%) and oil & gas (+0.5%) lead gains, while Travel (-0.5%), construction (-0.5%) and financial services (-0.5%) the main laggards.

Euphoria was also muted due to lack of new trade deal developments, even though Trump's top economic adviser Larry Kudlow said the two sides are “closer and closer” to a deal, and that top-tier officials would be talking this week. A strong U.S. jobs report Friday didn’t stop President Trump from suggesting the Fed should cut interest rates and stop shrinking its balance sheet.

“Today’s very minor move down has to be seen in light of recent developments,” said Britta Weidenbach, head of European equities at DWS. “We’re back at the levels where the correction started last year. So now the question certainly is, what’s next?”

Quite a few things are next, in fact, as Wednesday is a blockbuster day. We have the EU emergency Brexit summit where they will decide whether to grant the U.K. a further extension and on what terms, an ECB meeting a day earlier than normal, the US CPI report and FOMC minutes all slated for that day. That should be the highlight of the week ahead however we've also got a busy week for data out of China, as well as a number of scheduled Fed speakers, the annual IMF and World Bank Spring Meetings and a China-EU Summit. If that wasn't enough, US banks also kick off earnings season at the end of the week. Oh and Friday also marks the revised point that the U.K. leaves the EU if no extension is given this week.

Investors will also focus on the upcoming earnings season, which kicks off at the end of this week with U.S. banks reporting, and which will be a reality check for markets as analysts now expect a roughly 4% drop in EPS Y/Y, the first such drop since 2016.

“Q1 will definitely not be a good quarter for corporates, and it might well be that the market turns back to fundamentals whereas a lot of hope on China/U.S. trade deals and developments on the interest rate front had driven markets up year-to-date,” said DWS’ Weidenbach.

Bond markets were being squeezed by investors’ search for yield after benchmark German Bunds fell into negative territory. Greece’s 10-year government bond yields were within a shade of their lowest level in over 13 years as a cocktail of positive headlines boosted sentiment towards the country and zero percent Bund yields push investors to riskier investments. German bund yields traded at 1 basis point, just holding in positive territory, while US Treasuries and the dollar were steady after President Donald Trump stepped up pressure on the Federal Reserve to sustain growth.

Looking ahead, though, optimism persists: “Valuations are OK, global growth is expected to improve into the second half of the year, monetary and fiscal policy has become more supportive of markets and the trade war is receding,” said Shane Oliver, investment strategist at AMP Capital Investors Ltd. This “should support decent gains for share markets through 2019 as a whole,” he said.

In the latest Brexit news, UK PM May could offer the Labour Party a post-Brexit customs union today, prior to this The Times reports that PM May is set to offer Jeremy Corbyn a legally binding soft Brexit deal with a “Boris lock” that would make it difficult for a future Eurosceptic prime minister to tear up after she leaves No 10. (Newswires/Times) Separately, UK Labour party want a firm indication that the government is prepared to reopen the political declaration, there may be some movement later (either talks or a new offer), according to BBC's Nick Eardley. Conservative MPs are warning that they will move to remove UK PM May within weeks if the UK is forced to partake in EU elections and extend membership beyond the end of June.

In FX, we saw some more risk-aversion, as the dollar slipped 0.1% to 97.269 against a basket of currencies, while the euro inched up 0.1%, but hovered near a one-month low at $1.1229 ahead of the ECB meeting later this week. The pound edged higher as British Prime Minister Theresa May appealed to both the public and politicians in search of support for a compromise Brexit plan; whe needs to come up with a new plan to secure a delay from EU leaders at a summit on Wednesday as a deadline of this Friday draws ever closer. In Turkey, President Recep Tayyip Erdogan cited “widespread irregularities” in local elections in Istanbul, sending the lira lower.

In commodities, crude extended gains as an escalation of fighting in OPEC producer Libya overshadowed the biggest increase in U.S. active rigs since May. WTI and Brent prices are revisiting levels last seen in November 2018 (USD 63/bbl and USD 70/bbl respectively). Gains are spurred as conflict in Libya escalates, with Hafta ordering his troops to march towards Tripoli. The fight has not yet effected oil supply, with Port Zawiya closely monitored by oil traders as it is the closest to the conflict. In metals, London copper prices rose as much as 1 percent on Monday, snapping two days of declines.

Expected data include factory orders and durable-goods orders. Kenon Holdings is reporting earnings.

Market Snapshot

S&P 500 futures down 0.2% to 2,891.75

STOXX Europe 600 down 0.2% to 387.57

MXAP up 0.08% to 162.65

MXAPJ up 0.2% to 540.47

Nikkei down 0.2% to 21,761.65

Topix down 0.4% to 1,620.14

Hang Seng Index up 0.5% to 30,077.15

Shanghai Composite down 0.05% to 3,244.81

Sensex down 0.5% to 38,652.54

Australia S&P/ASX 200 up 0.7% to 6,221.35

Kospi up 0.04% to 2,210.60

German 10Y yield unchanged at 0.008%

Euro up 0.2% to $1.1234

Italian 10Y yield fell 4.1 bps to 2.124%

Spanish 10Y yield fell 0.4 bps to 1.101%

Brent futures up 0.7% to $70.81/bbl

Gold spot up 0.4% to $1,297.25

U.S. Dollar Index down 0.2% to 97.24

Top Overnight News

U.S. President Donald Trump’s frustration over his inability to fulfill his signature 2016 campaign promise to curb illegal immigration led him to oust his second homeland security chief, as the president eyes his re-election prospects next year; Homeland Security Secretary Kirstjen Nielsen resigned at Trump’s request after meeting with him Sunday, according to people familiar with the matter

A long but flexible extension to the Brexit process proposed by the European Union was denounced as “like purgatory” by a leading U.K. lawmaker, as Prime Minister Theresa May sought to gain support for a compromise departure plan

Larry Kudlow says the U.S. and China are “closer and closer” to a trade deal, and that top-tier officials would be talking again this week via “a lot of teleconferencing”

Bank of Japan Governor Haruhiko Kuroda says the economy is expanding moderately though weakness in overseas economies is weighing on exports and production

Oil extended its rally to a five-month high as conflict in major producer Libya increased the risk of new supply outages. Libya’s internationally-recognized government vowed to counterattack against forces loyal to strongman Khalifa Haftar

Japanese investors turned net buyers of German sovereign bonds in February, ending a four-month selling streak, according to balance-of-payments data

China’s foreign-currency holdings rose as lower government bond yields in developed markets lifted valuations. Reserves increased by $8.58b to $3.0988t in March, the People’s Bank of China said

Theresa May is hoping to re-start stalled Brexit negotiations with her chief political rival Jeremy Corbyn, in her search for a compromise plan she can sell to European leaders at a crucial summit this week

Japanese investors bought German and French bonds in February, when deepening concern over Europe’s economic slowdown spurred speculation the region’s central bank would join the Federal Reserve in turning dovish on monetary policy

Turkish President Recep Tayyip Erdogan urged the country’s election board to investigate “widespread irregularities” in local elections in Istanbul, where a partial recount is already underway after the ruling party contested its defeat. The lira declined on the remarks

According to a BOE survey released Monday, 47% of people see rates going up in the next 12 months, compared with 53% in November. Markets are also increasingly pessimistic of a hike amid increased Brexit uncertainty, and see a less than 10% chance of a move in the next year

Asian equity markets began the week mixed as the region somewhat failed to sustain the initial momentum from last Friday’s gains on Wall St, where all majors edged higher and the S&P 500 notched a 7-day win streak after the latest NFP data. ASX 200 (+0.6%) and Nikkei 225 (-0.2%) both opened higher with commodity-related sectors among the biggest gainers in Australia due to strength in metal prices and after WTI crude rallied to fresh YTD highs above the USD 63.00/bbl level, while risk appetite in Japan was less decisive and eventually waned as exporters contended with flows into JPY. Hang Seng (+0.4%) and Shanghai Comp. (U/C) were initially buoyed on return from their extended weekend as they played catch up to the optimism from last week’s US-China trade talks in which both sides noted significant progress was made and with discussions to continue via teleconference this week, while China also plans to ease the burden on businesses in which it will reduce companies’ social insurance contributions by CNY 300bln. However, the mainland gradually deteriorated as some were kept cautious by reports that plans for a US-China joint statement hit a stalemate due to differences regarding access to China’s market. Finally, 10yr JGBs were mildly higher with prices supported as the initial positive momentum in the region waned and with the BoJ present in the market for JPY 280bln in JGBs, while prices also tracked the rebound seen in T-notes in the wake of the US jobs data where weak wage growth subsequently saw the probability of a Fed rate cut this year increase to 75% before paring back to 50%.

Top Asian News

China Steps Up Gold-Buying Spree as PBOC’s Hoard Rises Again

UniCredit China Employee Said to Allegedly Embezzle $15 Million

India’s Cash Crunch Is Weighing on Financial Health of Firms

Lira Falls as Erdogan Demands Probe Into Lost Istanbul Vote

A subdued start to the week for European equities [Stoxx 600 unch] following on from a mixed Asia-Pac session as Friday’s NFP optimism waned ahead of another week filled with risk events. Broad-based losses are being experienced across major indices, whilst sectors are relatively mixed with energy names outperforming after WTI and Brent crude rallied to fresh YTD highs. In terms of individual movers, BMW (-0.4%) shares have nursed some losses after opening lower in excess of 2% amid reports that its Q1 results will be impacted by the EU fines into antitrust proceedings. This initially pressured its fellow German peers in sympathy [Daimler (-0.2%), Volkswagen (+0.4%)] who later climbed back above break-even. Sticking with Germany, Dialog Semiconductor (+1.1%) shares were bolstered amid news that the company closed a deal with US tech giant Apple (-0.4% pre-market), ahead of schedule. Finally, Fiat Chrysler (+1.3%) rose to the top of the FTSE MIB following reports the Co. signed a deal with Tesla to bypass EU emission rules. Elsewhere, Boeing (BA) CEO says they plan to cut their 737 Max monthly production by just under 20%. As such Co. are lower by 2.6% in the pre-market.

Top European News

Swedbank’s Debt Headache Reveals a ‘Remarkable’ Bond Outlier

Fiat to Pool Cars With Tesla to Meet EU Emissions Targets on CO2

Ashley Floats New Plan to Stave Off Debenhams Equity Wipeout

In FX, the Dollar continues to drift down from initial post-NFP highs as global stocks wobble and oil climbs to fresh ytd peaks. The DXY remains relatively rangebound, however, and ‘comfortably’ above the 97.000 handle within 97.230-384 parameters.

JPY/GBP - The Yen has regained a safe-haven bid and rebounded from circa 111.80 lows through 111.50 and close to the 200 DMA (111.495) vs the Greenback, while technical buying was also noted during the Asia-Pacific session in several Jpy crosses including Eur/Jpy and Nzd/Jpy that tested psychological/round number levels at 125.00 and 75.00 respectively. Meanwhile, Sterling retains an underlying bid vs the Buck above 1.3000 and is straddling 1.3050, as Eur/Gbp pivots 0.8600 in the run up to Wednesday’s EU Brexit Summit when UK PM May will present the case for another A 50 extension backed by a withdrawal plan or at least a strategy to avert no deal on April 12. On that note, she will resume talks with the Labour Party in an effort to find a compromise amidst reports that the opposition want a firm commitment to re-opening the PD rather than additions to the existing document.

- The Yen has regained a safe-haven bid and rebounded from circa 111.80 lows through 111.50 and close to the 200 DMA (111.495) vs the Greenback, while technical buying was also noted during the Asia-Pacific session in several Jpy crosses including Eur/Jpy and Nzd/Jpy that tested psychological/round number levels at 125.00 and 75.00 respectively. Meanwhile, Sterling retains an underlying bid vs the Buck above 1.3000 and is straddling 1.3050, as Eur/Gbp pivots 0.8600 in the run up to Wednesday’s EU Brexit Summit when UK PM May will present the case for another A 50 extension backed by a withdrawal plan or at least a strategy to avert no deal on April 12. On that note, she will resume talks with the Labour Party in an effort to find a compromise amidst reports that the opposition want a firm commitment to re-opening the PD rather than additions to the existing document. EUR - The single currency is also holding above a big figure mark vs the Dollar and 2019 lows not far below 1.1200, but chart resistance around 1.1250 and a key Fib is still capping the upside, while hefty option expiry interest at 1.1225 (1.4 bn) is also weighing on the headline pair.

- The single currency is also holding above a big figure mark vs the Dollar and 2019 lows not far below 1.1200, but chart resistance around 1.1250 and a key Fib is still capping the upside, while hefty option expiry interest at 1.1225 (1.4 bn) is also weighing on the headline pair. NZD/CAD/AUD/CHF - All relatively flat and narrowly mixed vs the Usd, as the Kiwi meanders between 0.6723-37 and also has expiries close by to exert some influence into the NY cut (1 bn at 0.6725). Elsewhere, another upturn in oil prices has helped the Loonie reverse some post-Canadian jobs data losses within a 1.3390-70 band, and is also supporting the NOK vs the Eur with the cross back down through 9.6500. Note, Barclays has shorted Eur/Nok and is looking for a move to 9.5908 with a 9.7100 stop. Elsewhere, the Aussie is hovering around 0.7100 and Franc is sitting tight near parity.

- All relatively flat and narrowly mixed vs the Usd, as the Kiwi meanders between 0.6723-37 and also has expiries close by to exert some influence into the NY cut (1 bn at 0.6725). Elsewhere, another upturn in oil prices has helped the Loonie reverse some post-Canadian jobs data losses within a 1.3390-70 band, and is also supporting the NOK vs the Eur with the cross back down through 9.6500. Note, Barclays has shorted Eur/Nok and is looking for a move to 9.5908 with a 9.7100 stop. Elsewhere, the Aussie is hovering around 0.7100 and Franc is sitting tight near parity. EM - The Lira has weakened even further vs the Dollar as municipal election results are recounted in Istanbul and Turkey mulls military action in Syria, while the CBRT has cut its FX swap rate by 150 bp and decided to restart 1 week refunding operations. Usd/Try up over 5.7000 and 5.7100+ at one stage.

In commodities, further supply-side woes have bolstered the energy complex to YTD highs with WTI and Brent futures revisiting levels last seen in November 2018 (USD 63/bbl and USD 70/bbl respectively). Gains are spurred as conflict in Libya escalates, with Hafta ordering his troops to march towards Tripoli. The fight has not yet effected oil supply, with Port Zawiya closely monitored by oil traders as it is the closest to the conflict. The port is scheduled to load 6mln barrels of crude in April which is subject to change if shipments are delayed. Amidst this, the oil complex last week saw speculators adding to their net long positive positions, with managed money positions in ICE Brent rising by just under 27k to result in net long speculative positions at almost 350k lots, the largest since the end of October 2018. Elsewhere, Saudi Energy Minister noted that he does not believe the Kingdom needs to cut output below its target, whilst a key architect of Russia’s OPEC+ deal said that the members could raise oil output in its June meeting. On the Aramco front, Saudi Energy Minister Al-Falih stated that the Aramco bond could attract demand north of USD 30bln (vs. touted USD 10bln) which will be used as part of a payment for the 70% purchase of Sabic (valued at USD 6.9bln). In the metals complex, gold prices are underpinned as the Greenback softened overnight and continues to pull back during the European session thus far. Demand for the yellow metal was also reflected in an increase in China’s gold reserves which showed the fourth consecutive month of gold purchases. Elsewhere, copper benefitted amid overnight gains across Chinese commodity prices in which Dalian iron ore futures extended on record highs, while Shanghai rebar and hot rolled coil rallied over 3% shortly after the open.

US Event Calendar

10am: Factory Orders, est. -0.5%, prior 0.1%; Factory Orders Ex Trans, prior -0.2%

10am: Durable Goods Orders, est. -1.6%, prior -1.6%; Durables Ex Transportation, est. 0.1%, prior 0.1%

10am: Cap Goods Orders Nondef Ex Air, prior -0.1%; Cap Goods Ship Nondef Ex Air, prior 0.0%

DB's Jim Reid concludes the overnight wrap

This week is set to be busy but get an early night on Tuesday (I can’t due to Champions League football. Exciting!) as Wednesday is a blockbuster day. We have the EU emergency Brexit summit where they will decide whether to grant the U.K. a further extension and on what terms, an ECB meeting a day earlier than normal, the US CPI report and FOMC minutes all slated for that day. That should be the highlight of the week ahead however we've also got a busy week for data out of China, as well as a number of scheduled Fed speakers, the annual IMF and World Bank Spring Meetings and a China-EU Summit. If that wasn't enough, US banks also kick off earnings season at the end of the week. Oh and Friday also marks the revised point that the U.K. leaves the EU if no extension is given this week.

We may also see more US/China trade headlines this week and as a start over the weekend, President Trump’s economic adviser Larry Kudlow said that the US and China are getting “closer and closer” to a trade deal, and that top-tier officials would be talking again this week via “a lot of teleconferencing.” He added that “we’ve made great progress on the IP theft. We’ve made good progress on the forced transfer of technology,” the Chinese have acknowledged their problems, which was a very big hurdle, and “what wasn’t on the table, is on the table.” However, China’s state run news agency Xinhua had said on Friday that “the remaining issues are all hard nuts to crack” while the White House official statement post last week’s trade talks suggested that “significant work remains, and the principals, deputy ministers, and delegation members will be in continuous contact to resolve outstanding issues.” At the moment though it still seems like we are slowly inching towards a deal.

Asian markets have started the week on a mixed note with the Hang Seng (+0.30%) up while the Nikkei (-0.21%) and Kospi (-0.05%) are down erasing early gains. China’s Shanghai Comp was up as much as +0.76% in early trading but is now down (-0.09%) with semiconductor and chip makers stocks weighing on the index (down -3.30%). Elsewhere, futures on the S&P 500 are down -0.17% while the Japanese yen is up +0.31% this morning. Oil prices (WTI +0.54% and Brent +0.51%) are also extending gains this morning as an escalation of fighting in Libya is threatening further supply cuts. In terms of data releases, we saw China’s March foreign reserves at $3.099tn (vs. $3.090tn expected). China’s onshore yuan is trading -0.17% this morning.

In other news, Italian daily Il Sole 24 Ore reported that Italy will make use of a contingency fund of €2bn to ensure its structural deficit target is met amid lower-than-forecast economic output and tax revenue. The media report follows earlier comments from Italian Deputy finance minister Massimo Garavaglia where he said that any shortfall in tax revenue would be offset by the ad hoc funds set aside in the budget following the comments from the EC Vice President Valdis Dombrovskis that weakening growth may force the country to freeze spending.

Moving onto Brexit, EC President Donald Tusk continues to push for a Brexit delay by as long as a year to allow time to forge a new consensus with an option to leave earlier once the withdrawal agreement is ratified by UK Parliament. As a reminder, PM May has asked for an extension up to June 30. Illustrating the tensions in her party, one of the leading Conservative lawmakers, Chief Secretary to the Treasury Liz Truss, warned on Sunday in a BBC radio interview that accepting a long, flexible extension would be “like purgatory” for Britain. Sterling is trading up +0.22% this morning.

Back to the week ahead. For the ECB it’s a chance for them to correct their messaging after disappointment expressed by the market after their last outing. Expect there to be plenty of questions directed at Draghi both on the TLTRO details and also the impact of negative rates. Newsflow on tiering has picked up in recent days including an acknowledgement in the latest meeting minutes. So markets will particularly be looking for clues as to where the internal debate on persistent low rates on bank margins, profitability and the transition mechanism now lies.

Shortly after the ECB on Wednesday we'll get the March CPI report in the US. The consensus is for a +0.2% mom core reading (it usually is) which would be enough to hold the annual rate at a relatively solid +2.1% yoy. In the evening we then get the FOMC minutes from the March meeting. A reminder that the message from this meeting was undeniably dovish. The median dot moved to no rate hikes this year with seven officials also seeing the Fed on hold at least through the end of 2020.

In Europe the data highlight might be the February industrial production reports with data due for the UK and France on Wednesday and the Euro Area on Friday. However with the recent slight pick up in China manufacturing maybe it’s too early to see any decent turn in data that will be from February. Meanwhile in Asia it's a busy week for data out of China with March CPI and PPI due on Thursday and March trade data due on Friday. We're also expecting to get the latest money and credit aggregates data covering March at some stage.

At a more micro level, this week will also see an early drip feed of Q1 earnings in the US including the banks with both JP Morgan and Wells Fargo due to report on Friday. Our US equity strategists noted in their preview report that the consensus and their top-down earnings model points to near flat earnings for Q1 for the S&P 500.

Finally, other things to potentially watch out for this week include China Premier Li Keqiang travelling to Brussels for the five day China-EU Summit today, the annual week long Spring Meetings of the World Bank/IMF kicking off today/tomorrow, Israel's general election tomorrow, the IMF's latest World Economic Outlook update tomorrow, the US Congressional Committee holding a hearing on Wednesday with the chiefs of the biggest US banks on "Holding Megabanks Accountable", the OPEC monthly oil market report on Wednesday, South Korea President Moon Jae-in meeting President Trump on Thursday, and India heading to the polls also on Thursday (albeit voting in phases with results in late May).

Ahead of all this, global equities performed well last week, with numerous major indexes advancing to multi-month highs. Friday’s nonfarm payrolls report didn’t do anything to damage the momentum but China’s PMI the preceding weekend and Europe’s generally better than expected PMIs in the first half of the week were the main catalysts. The S&P 500 gained +2.06% (+0.46% on Friday) to reach a fresh 6-month high, while the Stoxx 600 advanced +2.41% (+0.09% Friday). The DAX also reached a 6-month high, gaining +4.20% on the week (+0.18% Friday). Emerging markets outperformed, gaining +3.45% (+0.77% Friday) to reach their highest level since last August, with the Shanghai Composite pacing gains at +5.04% (closed Friday) to reach a 12-month high.

The positive sentiment pushed core bond yields higher, with treasuries and bunds ending the week +9.4bps and +7.7bps higher (-1.6bps and +1.3bps Friday), respectively. Peripheral European spreads tightened and corporate credit rallied. HY cash spreads in the US and Europe tightened -17bps and -22bps (-2bps and -3bps Friday), respectively. WTI oil advanced +5.20% (+1.88% Friday), boosted by the signs of strong US growth and by data from OPEC which showed a further decline in the cartel’s production.

Recapping Friday’s nonfarm payrolls report, we generally saw a continuation of the “goldilocks” environment, as the headline number beat expectations but wage growth fell short. The US economy added 196,000 jobs in March (177k expected) and the previous two months were revised higher by a net +14,000, with the unemployment rate staying steady at 3.8%. Average hourly earnings rose +0.1% mom, down from 0.4% mom in Feb and short of expectations for 0.3%. This led to the yoy rate dropping from 3.4% to 3.2% - 0.2% lower than expected.

Separately, President Trump made headlines on Friday by treading new ground in his war-of-words with the Fed. He said that “the Fed should drop rates” and that instead “of quantitative tightening, it should actually now be quantitative easing.” He cited the lack of inflation to support his view. Ten-year treasury yields fell a few basis points and the curve flattened slightly after his comments.