Last Week’s Chaos: The Trade Policy Circus and a Sudden Economy Panic
Picture the stock market as a roller‑coaster, clipped the brakes, and spun into a loop‑the‑loop: that’s the scene that unfolded last week. From “Truth Social” admin tantrums to Canada’s annoyingly repeatedly tweaked tariffs, the economy felt like it was in a fast‑paced soap opera with no happy ending.
The Trump Trade Folly
- Canada’s Steel & Aluminium Tipped Up to 50% in an 8‑hour spree—then got a quick 6‑hour retraction.
- EU Alcohol got slapped with a 200% tariff in retaliation for a fake 50% levy on American whiskey.
- Those hoops of policy twists make it a nightmare for investors to plan, price risk, or even figure out which direction the next big surprise will come from.
Not surprisingly, consumer confidence took a nosedive, reflected in the UMich Consumer Sentiment Index sliding to 57.9—the lowest since November 2022. Political splits show the big difference: Democrats see the economy in a dark cloud, Republicans tempering it slightly. The key question remains: will this dip in sentiment spiral into a rush of dented consumer spending?
Central Bank Shuffle: Fed vs. Others
While the United States hit back with its own term policies, the FOMC held the Fed funds rate at 4.25%‑4.50%, smoothing out the chaos. But they raised their inflation outlook and trimmed future growth forecasts—signs that the Fed isn’t ready to pull the plug on the tough path ahead.
Over in the Canadian Pacific, the Bank of Canada shaved 25bp off rates to 2.75%, keeping the policy tight against the current trade skirmish. Their goal: Anchor the Canadian economy as the trade war’s collateral damage runs on. Meanwhile, the Bank of England decided to pause at 4.50% with a short‑sighted vote to keep the goldie‑gill hunting.
Markets, Gold, and the Dollar: What the Winners and Losers Are After
- S&P 500 slid for the fourth straight week, slipping below the 200‑day average—time for a sell‑off if you’re a risk‑seeker, or a stash for the long‑term if you’re a believer in the ‘Trump Pump” myth that now seems defunct.
- Gold rose above $3,000 per ounce, shaking the safety‑net of portfolios. Currents show that even real‑yield links have fractured, inviting the bullion’s return.
- USD Index dropped to just under 104, letting the Euro crank up to new year‑to‑date peaks at 1.0947, and the Yuan stay near its own high. Traders now see the dollar as a sacrificial offering while the greenback languishes.
Week Ahead: Boilerplate and Butterfly Effect
Next week is jam‑packed with five G10 central bank decisions and a splash of key data. While the Bank of Japan, following its 0.5% stance, may edge toward a quick hike with inflation heading to another 4.0% YoY, the FOMC will likely keep calm‑with a slide‑but‑still‑tight stance. The Swiss National Bank will nudge rates by a slice (25bp) to the lowest point in its cycle.
Meanwhile, you’ll see:
- U.S. retail sales on Monday—any slip, and the recession nerves tighten.
- Micron Semiconductor earnings; FedEx figures—classic corporate barometers for consumer health.
- March’s A&H Figures (Euro, Pound etc.) and the Reuters’ Riksbank, BoE, and BoE’s own policy talk—all bringing noise into the already tangled global playing field.
Bottom Line? Keep Your Eyes Wide Open
If you’re chasing that sweet spot where risk and reward align, the treasury curve, especially the 10‑year offering, remains a solid buy—tone‑down on “save‑the‑dough” and a dab of optimism for the future. But for the cautious, stay on the defensive, as the White House’s next move could still turn the market, and political uncertainty can ripple rawly.
Keep your finger on the pulse; the next 36 hours of policy decisions will add more chapters to this ongoing drama of trade, currencies, and the ever‑hopping market.
