Trump Drops a Trade Bombshell… and the Markets Catch Their Breath
Who’s ready to pop some champagne? Spoiler alert: it’s all about the UK’s tiny 0.1% bump in the last three months of 2024. I’m pulling a joke, but the feel of the news is pretty close to the vibe I’ve been hearing in my feeds.
UK’s “Slightly Better” but Still “Nice”
- Fourth‑quarter GDP came in a bit above expectations.
- Growth is still feeling that little “anaemia” — it’s tired and losing steam.
- Downside risks are lingering: newer cuts in government spending and a looming tax hike in April are adding to the pressure.
- Stagflation keeps the pound off the cool track – investors are keeping their distance, and the market remains cautious.
Bottom line? The pound‑denominated assets are still a tough sell. We’ll keep caving in on any optimism about the UK turning out of the woods.
Trump’s “Word” on Reciprocal Tariffs
After a week of “stay tuned” drama, Trump finally signed a Presidential memorandum (yes, not an executive order) announcing the next step in U.S. trade policy. But here’s the catch: it’ll only kick off in early April. He’s also hinted that we might see new tariffs on cars, chips and even pharmaceuticals.
In short, the “Sword of Damocles” hangs over global trade for the time being. While there is plenty of time before it bites, it also gives room for diplomatic negotiations to prevent the tariffs from actually taking hold.
What the Markets Did
- Stocks moved higher, a “soft‑boi” type rally that’s exactly what happened when traders felt the trade measures were delayed.
- U.S. dollar slid, giving room for other G10 currencies to creep up.
- Treasuries eased along the curve as inflation expectations dropped; the 10‑year benchmark was back to pre‑CPI levels by Wednesday.
In the chaotic trading environment, the noise is way louder than any clear signal. This is a classic Trump‑style play: you only know the policy direction once a new Truth Social update drops.
My Current Forecast
- USD: Bullish (still looking sharp against other currencies).
- Equities: Still Bullish (the U.S. economy’s performance keeps propelling the market).
- Gold: Bullish (the ongoing haven demand keeps the “yellow metal” shining).
Even if it feels like a strange trio, the ongoing U.S. economic beat is giving those assets a push, while the market’s wariness about global trade keeps gold cozy and safe.
The look ahead
Quick Pulse of the Market
Before we all punch the clock and kick back for the weekend, let’s run through a couple of headline grabs that might interest you.
US Retail Sales – A Blink of the Consumer Window
- Headline sales slipped 0.2% MoM last month. They’re a bit shy this time.
- Control‑group sales, the real MVP that feeds into GDP, leapt 0.3% MoM. The goods that actually weigh up the economy are looking brighter.
As always, remember the classic mantra: “Never bet against the US consumer.” If the market’s conditioning the consumer, we’re in for an interesting ride.
Industrial Production – Steady Gains, but Stay Alert
- US production nudges up 0.3% MoM in January. Small, but steady.
- Eurozone Q4 GDP estimates stay flat, hinting at a stagnant start to the year.
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