Adds new comments
SINGAPORE/LONDON/NEW YORK, Jan 21 (Reuters) - Global markets were volatile while the dollar rebounded on Tuesday in choppy trading as Donald Trump returned to the White House.
President Trump did not immediately impose tariffs on Monday as previously promised, but said he was thinking about imposing 25% duties on imports from Canada and Mexico on Feb. 1 over illegal immigrants and fentanyl crossing into the U.S.
While the Mexican peso and Canadian dollar fell against the greenback, European shares dipped in early trade and U.S. stock futures were firmer.
Here are some comments from investors and analysts:
THOMAS URANO, CO-CHIEF INVESTMENT OFFICER, SAGE ADVISORY, AUSTIN, TEXAS
"This is typical of what we're going to see: there's a lot of rhetoric and talk about policies or upcoming policies, or policy intentions. But the reality is all about the actual implementation."
"Post-election, the bond market built a lot of anxiety and concern over Trump policy causing a re-acceleration of inflation. And I get that and it's because of this wave of uncertainty. You don't really know what's going to happen. You know something may spark it and you know the market has a tendency to price in a worst-case outcome, which I think is reasonable. That was what really drove this post-election move higher in rates."
"There was speculation over the weekend that Trump will not actually go with Day One tariffs and of course we didn't see that. So the market has been good. And the CPI number has been been very helpful. Yields are off 23 basis points from the recent peak."
HELEN GIVEN, FX TRADER, MONEX USA, WASHINGTON
"Volatility is clearly back in a big way, and after the relatively calm term of Joe Biden, FX markets are on a hair trigger for any tariff talk from the Trump administration. Trump's proposed tariffs, though, are right now still just that - proposals. Traders are trying to get ahead of the risk of tariffs on Mexico and Canada, but until such actions materialize trying to hedge around them is going to keep markets very choppy, and we've seen that price action today.
"The last 24 hours have harkened back to Trump's first term in office, when the President could upend markets with a single statement or tweet, and MXN and CAD's wild swings in the last day in particular have served as a reminder of that. We're preparing for substantially higher volatility through the next two weeks for sure, at least through Trump's new self-imposed Feb 1 deadline on tariffs against Canada and Mexico."
"The lack of a deadline on tariffs against China, though, is weighing on the U.S. dollar a bit and we could see some downside for the Buck until more concrete actions are announced."
WALTER TODD, CHIEF INVESTMENT OFFICER, GREENWOOD CAPITAL, GREENWOOD, SOUTH CAROLINA
"If there's one kind of 'surprise,' it was the lack of specificity or any type of specificity on tariffs."
"I think there was an expectation that he was just going to do an executive order and hit it hard and he didn't. And so you're seeing rates down, you're seeing the dollar down, I think as a function of that."
JASON DRAHO, HEAD OF ASSET ALLOCATION AMERICAS, UBS GLOBAL WEALTH MANAGEMENT (EMAILED COMMENTS)
"(Trump) took off the Day One announcement of new tariffs and instead issued a memorandum of understanding directing federal agencies to study trade policies. It's only the first day, but that decision supports our view that Trump 2.0 policies will ultimately favor DOGE over MAGA economic ideologies, which means that the net effect of the policies should be positive for the supply side of the economy."
MARK HAEFELE, CHIEF INVESTMENT OFFICER, UBS GLOBAL WEALTH MANAGEMENT
"Our base case for the U.S. economy is for 'growth despite tariffs.' While we will be closely monitoring for risks, we do not believe that the tariff measures outlined in our base case would be sufficient to derail U.S. growth. Nor do we believe that such tariffs would preclude inflation continuing to fall from current levels, enabling the Fed to cut rates by 50 bps later this year."
AMELIE DERAMBURE, SENIOR MULTI-ASSET MANAGER, AMUNDI
"Markets will clearly try to anticipate and dissect which sectors and areas will be targeted by tariffs so the volatility on markets will come from that."
"European assets, especially equities, will be volatile because tariff news wily be especially important for Europe."
JIM REID, GLOBAL HEAD OF MACRO STRATEGY, DEUTSCHE BANK, LONDON
"A lack of immediate moves on tariffs supported the market mood yesterday, but this has partially reversed overnight as late in the day Trump renewed an immediate threat of 25% tariffs on Canada and Mexico, which could be announced as soon as February 1st."
KYLE RODDA, SENIOR MARKETS ANALYST, CAPITAL.COM, MELBOURNE
"It's Trump's world and we are all just living in it - and the markets are going to have to get used to that again. I think the price action in currencies tells you a clearer story about trade war risks and the signals are pretty apparent - tariffs mean a stronger U.S. dollar due to higher import prices and weaker global growth, no tariffs means stronger global trade and a more robust global growth backdrop."
"Just like the first Trump administration, the markets are highly sensitive to headline risk, especially as it relates to trade wars."
CHARLES WANG, CHAIRMAN OF SHENZHEN DRAGON PACIFIC CAPITAL MANAGEMENT CO, SHENZHEN:
"You don't expect Trump's inauguration to trigger a big rally, as it's unrealistic for Sino-U.S. ties to suddenly reverse … and you don't read too much into the words of Trump, who is very fickle."
"I think Trump is now more pragmatic toward China."
KIYONG SEONG, LEAD ASIA MACRO STRATEGIST, SOCIETE GENERALE, HONG KONG
"While there was no immediate tariff imposed on China, providing some relief to the market, President Trump has initiated tariffs on Canada and Mexico. It is unlikely that he will alter his plan regarding tariffs on China."
"A potential delay in the imposition of tariffs on China could also lead Chinese authorities to abstain from implementing a definitive stimulus. In such a scenario, renewed market skepticism about China's growth recovery may overshadow the tariff narrative, as an inadequate stimulus to bolster domestic consumption would underscore the growth disparity between China and the U.S."
SHOKI OMORI, CHIEF GLOBAL DESK STRATEGIST, MIZUHO SECURITIES, TOKYO
"Twenty five percent looks high as a starter, and markets reacted quickly, especially in FX. I think market participants thought Trump would start with China, with say a 10%-20% tariff on goods but gradual increase."
"USDCNH (dollar/Chinese yuan) cheapening is temporary, I doubt it will continue. USDCNH is set to go lower with the Trump administration coming up with tariffs."
CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE
"The first few hours of Trump administration has underscored that policy environment will be dynamic once again and markets should brace for volatility. Clearly, the markets celebrated too soon with tariff threats missing at the outset in Trump’s inaugural speech."
"However, the respite was short-lived and latest announcement on Canada and Mexico tariffs likely to be enacted Feb 1 reaffirmed that the tariff threat was only delayed and not averted. Still, the absence of any threats on China has kept the hopes of a negotiation alive there, especially after the Trump-Xi phone call last week as well."
ANDREW SWAN, PORTFOLIO MANAGER, MAN GLG. SYDNEY
"I'll say one positive surprise we may see this year is actually some sort of resolution between U.S. and China from an economic point of view, not a strategic point of view. At least an economic sort of deal to be done so the risk is actually lower tariffs. That will be extremely positive for Asia."
VIS NAYAR, CHIEF INVESTMENT OFFICER, EASTSPRING INVESTMENTS, SINGAPORE:
"Tariffs are necessarily an overhang. I would just say that we simply don't know, what we had was pressure on the currency and pressure on markets in the lead-up to yesterday. So he (Trump) didn't announce anything (on China), which is naturally a little bit better than we might have expected. I think we should expect volatility."
"But there is hope that there is some pragmatism. We have to assume that he's not going to do anything that just brings up U.S. inflation without paying attention to that."
(Reporting by Ankur Banerjee, Kevin Buckland, Rae Wee, Yiming Shen, Winni Zhu, Saeed Azhar, Aida Pelaez-Fernandez, Dhara Ranasinghe, Naomi Rovnick, Gertrude Chavez-Dreyfuss, and Lewis Krauskopf; Compiled by Karin Strohecker and Gertrude Chavez-Dreyfuss; Editing by Stephen Coates)
((gertrude.chavez@thomsonreuters.com; 646-301-4124 amanda.cooper@thomsonreuters.com; +442031978531; Bluesky: @acoops.bsky.social))
