NOISY MARCH
Last week, global stocks were again weighed down by policy uncertainty as US tariffs were implemented, with retaliation from some of its key trading partners.
German bund yields rose after an agreement was reached to pass the proposed fiscal package.
This week, focus is set to be on tomorrow's Fed meeting. While no change to the target Fed funds target rate of 4.25-4.50% is expected, recent soft data means market focus is likely to be on the Bank's updated economic projections and the post-meeting press conference for Chair Powell's outlook.
The US imposed 25% tariffs on all steel and aluminium imports on Wednesday, with retaliatory tariffs applied to certain American imports into Canada. Europe announced that it would impose tariffs on some US goods from April, with Trump subsequently threatening a 200% tariff on European alcohol imports into America.
US consumer-price inflation decelerated in February. Headline prices rose by 2.8% y/y and core prices were 3.1% higher, with both measures below consensus expectations.
German Chancellor-elect Merz said an agreement was reached with the Green Party to pass the proposed fiscal stimulus measures, with one concession that 20% of the €500bn infrastructure fund to go towards the green transition.
China's government yesterday said it plans to “vigorously boost consumption”, indicative of its focus on growth-boosting measures this year.
US equities fell for a fourth consecutive week amid continued policy and economic uncertainty, with the S&P 500 down by 2.3%.
European equities were also pushed lower by tariff talk, with the EuroStoxx 600 falling by 1.2%, though German stocks were only down by 0.1% as the prospect of fiscal stimulus supported sentiment.
European bond yields rose (bond prices fall as yields rise), with that for the 10-year German bund up by 6bps to 2.89% as a significant rise in debt issuance is expected from the fiscal package.
The 10-year US Treasury yield was flat, finishing the week at 4.32% as slower inflation data was counterbalanced by the prospect of tariffs raising price pressures.
- Tue 18th US - Industrial production • Germany - ZEW business survey
- Wed 19th US - Fed meeting
- Thu 20th US - Initial jobless claims, existing home sales
- Fri 21st Eurozone - Consumer confidence
This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.