Geopolitics and macroeconomics: key trends of the week
Oleg Kalmanovich What happened last week
US futures are modestly down - about 1-1.5% for the main indices. Pressure on the stock section is happening against the backdrop of new tariff threats and criticism of the Federal Reserve. Against the backdrop of global instability, concerns are growing about Trump's interference in the work of the Federal Reserve - he hinted that he may try to fire Chairman Powell. This could add uncertainty to the market, because political pressure on monetary policy will undermine the independence of the Fed and force investors to seek refuge in safe haven assets again.
Geopolitical risks remain
China has said that it will respond to any agreements with the US that threaten its interests, which increases the risk of trade conflicts. “China will not allow deals to the detriment of its economy and is ready to take retaliatory measures,” a Foreign Ministry spokesman said.
US domestic market prepares new "challenges"
The bond market is an important indicator of sentiment.
The yield on 10-year US Treasury bonds rose to 4.33%. Rising yields could push Trump to revise tariffs, as rising rates increase debt servicing costs and affect the economy.
Main events of the current week
This week, the market will not be rich in important financial events. Of what is worth noting - data on the PMI business activity index of leading Western economies, which will be released on Wednesday, April 23.
If the Eurozone PMI falls sharply, this could change the eurodollar trend - the index is closely linked to the union's GDP. According to the PMI indicators, the US is expecting a further decline in the manufacturing sector and a slowdown in growth in the services sector for April. This is an important indicator that will help understand how much the situation has worsened after the trade conflicts
Investors are also monitoring the development of US trade negotiations with China, Japan and Britain. The important point is the tariff rate: a reduction below 10% will increase risk appetite, but Trump called 10% the base level, and it is unlikely that it will be reduced, but it is worth following the progress of these tariff negotiations - now this is the main news trigger that the market reacts to.
Follow the news with the Neomarkets team!
