Key Headlines:

• Trump Holds His Ground – Despite growing market concern, Trump is standing firm on the new tariffs, showing no signs of backing down.

Could this hardline stance prolong trade tensions?

• Markets Take a Hit – Stock markets opened with steep losses as investors react to rising recession fears and trade uncertainty.

What’s been Happening in the Markets?

On Friday, investors became even more nervous. Stock markets dropped further as people rushed to move their money into "safe haven" currencies like the Japanese yen (JPY) and Swiss franc (CHF). Unusual moves like GBPAUD and GBPNZD hitting their highest levels in 10 years were clear signs of market stress. Meanwhile, China warned it may strike back in response to US tariffs, adding more tension.

Later in the day, the head of the US central bank, Jerome Powell, made things even more uncertain. He changed his tone, saying that the new tariffs are bigger than expected and might push prices up for longer than he had previously believed. This could mean interest rates stay higher to fight inflation.

Even though job numbers came in stronger than forecast, unemployment only ticked up slightly to 4.2%. So, the job market still looks solid—but markets are more focused on the bigger risks from trade tensions and inflation.

Today’s Overview:

Markets Stay Nervous as Recession Fears Linger

Markets opened today continuing the same pattern we saw on Friday—investors are still playing it safe. Safe-haven currencies like the Japanese yen (JPY) and Swiss franc (CHF) are rising, while riskier ones like the Australian and New Zealand dollars (AUD and NZD) are losing ground. Even though Fed Chair Jerome Powell made strong comments about inflation on Friday, traders are now expecting up to five interest rate cuts this year, as fears of a U.S. recession grow, and the Trump administration stands firm on its tough tariff stance.

Looking ahead, the big focus in the U.S. this week will be on inflation. We’ll get Consumer Price Index (CPI) data on Thursday and Producer Price Index (PPI) data on Friday. These will offer the first clues about whether the new tariffs on countries like Canada, Mexico, and China are starting to push prices up. If inflation starts to creep in, we might first see it show up in the PPI numbers due to rising commodity costs.

In Europe, it’s a quieter week for economic data. The only major release is the UK’s February GDP figure on Friday. After a small drop in January, a slight rebound of 0.1% is expected.

Key Takeaways:

💱 Safe-haven currencies (JPY, CHF) rise, while AUD and NZD weaken as market jitters continue

📉 Markets now expect five Fed rate cuts this year despite Powell’s inflation warnings

📊 U.S. CPI and PPI this week could reveal the first signs of tariff-driven inflation

🇬🇧 UK GDP data is the only major release in Europe—modest growth expected after January’s dip

Questions…

Do you think the Fed will actually cut rates five times this year?

If inflation picks up, how could that affect your everyday costs or your investments?

With markets this shaky, are you adjusting your strategy or staying the course?

7th April 2025

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