Weekly Market Note_04.25.2025
Global Markets & Economic Data:
A blistering countertrend reversal in risk sentiment this week followed fears of Trump/Powell fallout at the start of the week. Trump's growing proactive reaction on stress market days is revealing where his "put" is struck on providing a floor against asset price free fall.
US: Durable goods orders surged in March, driven by aircraft. The Kansas Fed Regional Manufacturing Index has been in contractionary territory since the end of 2022. Existing Home Sales remained at multi-year lows in March and supply/inventory levels are rising rapidly in many regions. Weekly Jobless Claims figures remain subdued. Leading investment banks have pulled back on 2025 US recession forecasts, calling for a "slowdown" instead. The latest GDP now realcasts expect a small Q1 negative print.
Europe: UK April PMIs reflected a slowdown in manufacturing and services and price pressures keep rising. PMIs in the Eurozone were similarly soft. German stocks are outperforming EU-wide stocks MTD and YTD amid rising business sentiment.
Asia: South Korea's Q1 GDP unexpectedly contracted. Taiwan's March factory activity remained strong. Japanese inflation measures continue to trend higher. Chinese manufacturing is slowing while services activity is ticking higher from tepid levels.
The Uncertainty Slowdown
Typically, government public policy is reactionary to economic developments and mostly errs on the supportive side. The current “crisis” is unusual because it is wholly man-made by the US presidential administration. As such, there are a wide range of outcomes that have little basis on economic fundamentals.
Global market participants might be slightly jilted by the market volatility. However, the true impact of the US’s approach to global trade negotiations is being felt in the real economy where corporate CEOs are faced with little medium-term visibility and therefore are delaying many business decisions until clarity emerges.
.