US employment reports, key tech earnings, the IMF and World Bank meetings, and important data releases for the US and China will keep markets busy this week. Later today, the ECB’s Guindos discusses the central bank’s annual report to the European Parliament. On Tuesday, we have US job openings and Conference Board consumer confidence readings. We will also hear from the ECB’s Holzmann and the BoE’s Ramsden. China’s official and Caixin PMI prints follow on Wednesday. We also have eurozone GDP, key European economy CPI releases, US GDP, PCE price index and employment figures, as well as Meta and Microsoft earnings to digest. UK PMI, US ISM manufacturing data, and initial jobless claims will garner attention on Thursday (May Day), along with Amazon and Apple earnings and the BoJ’s rate decision (no change expected). UK local elections on Thursday could reshape British politics. The week concludes with eurozone CPI, PMI and unemployment figures, and the all-important US payrolls data.
Tariff mayhem and Trump’s attack on the Fed’s competence and independence dragged asset classes lower at the start of last week. It appears the volatile moves unnerved Trump and his advisors. As such, relative calm returned amid signs of a potential de-escalation in the US-China trade war. US Treasury Secretary Bessent further suggested that a decoupling of the world’s two largest economies is not the administration’s objective. Trump also backtracked, stating it is not his intention to fire Fed Chair Powell.
The potential for de-escalation in trade tensions saw the US Treasury curve bull flatten by the end of the week. Having traded as high as 4.43% intra-week, the yield on the 10-year UST closed 9bps stronger at 4.24%, while the 2s30s spread tightened by 5bps over the week. The S&P Index also enjoyed a recovery, up 4.59% last week. Meanwhile, the dollar posted its first weekly gain since March, up 0.24%. Brent crude fell 1.60% amid growth concerns and increased supply.
Fed rhetoric emphasised the need to remain data dependent. However, towards the end of the week, there were suggestions that the Fed could look to cut rates. Hammock dismissed the possibility of a May interest rate cut but indicated that the central bank might lower rates as soon as June if economic trends become clearer. Waller noted his concerns over layoffs in the US amid tariff worries, adding that he would support a cut if there were a significant rise in unemployment. The Fed’s Beige Book revealed widespread anxiety over President Trump’s expanded tariffs. While economic activity remained stable, trade policy uncertainty dominated the report, with tariff mentions more than doubling. Businesses reported rising supplier costs, plans to pass increases to consumers, and cautious hiring approaches amid the prevailing uncertainty.
Meanwhile, the IMF lowered its global growth projection for 2025 to 2.8%, down from 2024’s 3.3% growth rate, citing ongoing global trade disputes as creating persistent uncertainty. Economic expansion in the US is forecast to decline to 1.8% in 2025 from last year’s 2.8%, while China’s economy is anticipated to slow to 4% growth, compared to 5% in 2024.
Elsewhere, at the April Politburo meeting, China acknowledged rising external economic pressures while confirming plans to ease monetary policy, though without announcing new stimulus beyond March approvals. Beijing appears to be selectively waiving its 125% retaliatory tariffs on critical US imports, suggesting mounting economic strain, even as officials pledge support for exporters through loan maintenance and market diversification. Though officials expressed confidence in reaching China’s 5% growth target, many economists have downgraded forecasts to 4% or lower, questioning whether domestic consumption can offset export losses in an economy already challenged by property market slumps. Cargo shipments to the US have reportedly fallen by 40% since the latest tariff increases.
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