Today’s Headlines:

• Bond yields climb following the start of new tariffs
• Markets continue to swing amid heightened uncertainty

Market Recap

While stock markets kept rising from their recent low points, currency movements were quieter among major global currencies. The British pound (GBP) stayed close to its lowest value in a month against the US dollar and found some strength against the euro, bouncing off levels last seen in August 2024. Meanwhile, the pound stayed very strong against the Australian and New Zealand dollars—still trading near the highest levels in about 10 years.

Today’s Outlook: Market Mood Shifts as Tariff Impact Hits Inflation Forecasts

Recent tariff moves are starting to change how investors think about inflation and interest rates in the US. Inflation is now expected to rise more than previously thought, with markets predicting 3.55% CPI by the end of the year—up from 2.94% in March, and above the current 3%. But here's the twist: at the same time, markets are still pricing in interest rate cuts worth 90 basis points this year. That doesn’t quite add up—higher inflation usually means fewer cuts. If expectations shift toward fewer cuts, the US dollar could bounce back strongly.

Meanwhile, stock markets took a hit overnight, reacting to new reciprocal tariffs that now apply to around 60 countries—including a massive 104% tariff on Chinese imports. US government bonds and the dollar also lost value, showing how nervous markets are. However, there's been a small recovery in equities this morning as investors look for stability.

It’s a quiet day in terms of European data, but attention turns to this evening’s Federal Reserve minutes. Still, given all the recent tariff action, these minutes may already be outdated.

🔍Key Takeaways:

• Inflation Expectations Climbing: Markets now see US inflation (CPI) hitting 3.55% by year-end.
  

👉 What could this mean for your savings or the cost of borrowing?

• Rate Cuts May Be Overestimated: With inflation rising, the Fed may not cut rates as much as expected.
  

👉 Could a stronger dollar be back on the table?

• Tariffs Take Center Stage: US has hit China with a massive 104% tariff, affecting global sentiment.
  

👉 How might this impact trade and prices for everyday goods?

• Market Volatility Continues: Stocks dipped on tariff news, but signs of recovery are emerging.
  

👉 Is this a dip to watch or a signal to stay cautious?

• Fed Minutes Tonight – But Are They Still Relevant? With recent developments, today’s Fed minutes might not reflect the current outlook.

9th April 2025

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