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The market is now fully priced for an ECB rate cut on Thursday and Deutsche Bank economists have got on board.

• The economic hit from reciprocal tariffs, uncertainty, and tighter financial conditions likely exceeds what the ECB was expecting
• Previous ECB assumptions that tariffs would boost inflation have been challenged
• Recent developments including higher EUR, lower oil prices, and greater risk of trade diversion are skewing inflation risks to the downside

Deutsche Bank believes the ECB will maintain a “meaningfully less restrictive” stance description despite the upcoming rate cut. They note that after 150bp of cuts, policy rates are getting closer to neutral, and combined with the view that inflation is returning to target, this has “an implicit dovish leaning.”

The bank has provisionally revised its GDP forecast down to +0.5% for 2025 (from +0.8% previously), though they maintain their 2026 forecast at +1.0%. They’ve also adjusted their inflation outlook, now seeing headline HICP averaging 2.0% in 2025 (from 2.1%) and 1.7% in 2026 (from 1.9%).

Looking ahead, Deutsche Bank maintains its terminal rate call of 1.5% by year-end 2025, with further cuts expected in June, September and December. They note that while the pause in higher US reciprocal tariffs has “essentially shut down any possibility of a 50bp rate cut in April,” the overall direction remains clear.

“This is a complex and dynamic shock,” Deutsche Bank analysts write, indicating the ECB will need to remain nimble as conditions evolve.

This article was written by Adam Button at www.forexlive.com.

• US stocks close at higher with major indices having their best week in 2024
• Gold has its best week since since the March 2023
• Crude oil futures settled $61.50. Key target near $63.64 held resistance this week
• Nasdaq held 200 week MA this week. Back above the 100 week MA
• Collins: Fed ‘absolutely’ ready to help stabilize markets if needed
• Trump said to have assured CEOs that a policy pivot on tariffs is underway
• Trump has made it clear he is open to a deal with China – White House
• Don’t drill baby: Baker Hughes sees US park 9 rigs
• European equity close: A stumble to the finish line in a volatile week
• Fed’s Williams: Tariffs will boost inflation to between 3.5% to 4% this year
• More from Musalem: I expect growth this year to be lower than trend
• US 30-year yields are on track for their largest weekly rise since 1982
• UMich April prelim consumer sentiment 50.8 vs 54.5 expected
• Hours before the latest China tariffs the Trump admin told them to request a Xi-Trump call
• Something that should worry US policymakers: The reaction function is now to sell bonds
• Fed’s Collins at this point the expectation is the Fed will need to hold for longer
• Fed’s Collins: We came into first quarter with solid economic conditions
• US March PPI +2.7% vs +3.3% expected
• The USD is lower following China’s increase in tariffs of US goods to 125%
• ForexLive European FX news wrap: Dollar woes continue, China hits back on tariffs
• Fed’s Kashkari: Our job is to make sure inflation expectations don’t rise

The U.S. dollar ended the day sharply lower, led by a -1.50% drop versus the New Zealand dollar, followed by a -1.35% decline against the euro, and a -1.03% fall versus the Australian dollar. The dollar’s weakest performance was against the yen, falling a relatively modest -0.60%.

The move lower was supported by a string of softer inflation readings, with today’s PPI Final Demand declining -0.4% m/m vs. +0.2% expected, while core PPI (ex-food and energy) fell -0.1% vs. +0.3% forecast. This followed tamer CPI data released yesterday, reinforcing expectations for easing price pressures.

Economists now estimate that Core PCE, the Fed’s preferred inflation gauge, likely rose just 0.1% m/m in March, down from 0.4% in February. This would slow the annual Core PCE rate to 2.6%, from 2.8% previously — a move driven by falling prices for airfares, hotel stays, and used vehicles.

However, headwinds remain. Recent tariff increases on Chinese imports are expected to reignite inflationary pressure in the months ahead, potentially complicating the Fed’s path forward.

Yields soar despite soft inflation

Despite the disinflation narrative, U.S. Treasury yields surged, reflecting lingering inflation concerns and perhaps positioning ahead of next week’s data:

• Daily changes:

  • 2-year: 3.962% (+11.7 bps)

  • 5-year: 4.161% (+12.4 bps)

  • 10-year: 4.493% (+10.2 bps)

  • 30-year: 4.875% (+2.7 bps)

• Weekly gains:

  • 2-year: +37.0 bps

  • 5-year: +45.4 bps

  • 10-year: +49.5 bps

  • 30-year: +46.2 bps

Stocks bounce back from deep lows

Despite rising yields, U.S. equities posted strong weekly gains, rebounding from sharp drawdowns earlier in the week. The S&P 500 had fallen as much as -21.35%, while the Nasdaq was down -26.83% at its lowest.

Mid-week, however, saw oversized rebounds:

• NASDAQ: +12.16% on Wednesday

• S&P 500: +9.52%

That rally helped the Dow (+5.07%) and S&P 500 (+5.85%) notch their best weekly performance since October 30, 2023, while the NASDAQ’s +8.10% gain marked its strongest week since November 7, 2022.

Fed’s Collins reassures, but remains cautious. Fed’s Williams sees inflation rising to 3.5% to 4%

Fed Governor Susan Collins added to the positive sentiment, stating the Fed is “absolutely” ready to stabilize markets if needed, reinforcing its role as a backstop during disorderly moves. However, she noted that the bar remains “pretty high” for preemptive rate cuts, signaling a continued cautious stance on policy easing.

She also addressed the recent U.S. dollar weakness, suggesting it may reflect expectations of slower economic growth, and added that it’s still too soon to assess whether Trump’s trade policies will disrupt capital flow dynamics.

New York Fed President John Williams warned that new tariffs could lift inflation to between 3.5% and 4% this year, adding significant uncertainty to the outlook. He noted the economy began the year on solid footing but expects growth to slow to just 1% and unemployment to rise to 4.5%–5%. Williams emphasized the importance of keeping inflation expectations anchored and said a modestly restrictive monetary policy remains appropriate for now. His remarks contrast with market expectations for rate cuts, highlighting the Fed’s cautious stance in the face of rising trade-related risks.

Monday:
The week begins with China releasing its March Trade Balance data, offering a key read on global demand and export dynamics as trade tensions and tariff impacts remain in focus.

Tuesday:
A busy day featuring the RBA Minutes, which may shed light on the central bank’s inflation and rate path outlook. The UK Jobs Report (covering February and March) will be closely watched for labor market trends. In the eurozone, attention turns to Industrial Production data and the German ZEW Survey for April. Canada rounds out the day with its March CPI report, which could influence expectations for the Bank of Canada.

Wednesday:
Markets will digest a flurry of top-tier releases. The Bank of Canada (BoC) is set to announce its latest policy decision. China will publish its Q1 GDP and March activity data, offering insight into the post-tariff economic landscape. The UK and Eurozone CPI reports are due, including the eurozone’s final CPI print for March. In the U.S., March Retail Sales take center stage. Lastly, New Zealand’s Q1 CPI will be released, relevant for RBNZ rate expectations.

Thursday:
Central bank decisions dominate the day, with both the European Central Bank (ECB) and Turkey’s CBRT scheduled to announce policy updates. Japan will publish its March Trade Balance, while Australia will release its March Jobs Report, offering fresh perspective on labor and inflation pressures down under.

Friday:
Markets in several regions will observe Good Friday, limiting liquidity. However, Japan will release its March CPI, which could still influence JPY direction into the weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The major US stock indices are closing solidly higher and with the best gains the 2024.

The final numbers are showing:

• Dow industrial average rose 619.05 points or 1.56% at 40,212.71 points
• S&P index rose 95.31 points or 1.81% at 5363.36.
• NASDAQ index rose 337.14 points or 2.06% at 16724.45.
• The small-cap Russell 2000 gains 28.80 points or 1.57% at 1860.2047.

For the trading week:

• Dow industrial average rose 4.95%. It’s best week since a gain of 5.07% on October 30, 2023.
• S&P index rose 5.7%. That was his best week since October 30th 2023 when the index rose 5.85%
• NASDAQ index rose 7.29%. It’s best week since November 7, 2022 when the index rose 8.10%
• Russell 2000 rose 1.815%. That was it best week since 3.95% on January 13, 2025

This article was written by Greg Michalowski at www.forexlive.com.

Monday

Before Open:

• Goldman Sachs

• M&T Bank

After Close:

• FirstBank

• Pinnacle Financial Partners

Tuesday

Before Open:

• Bank of America

• Citi

• Johnson & Johnson

• PNC

• Albertsons

• Ericsson

After Close:

• United Airlines

• Interactive Brokers

• J.B. Hunt

Wednesday

Before Open:

• ASML

• US Bancorp

• Abbott

• Progressive insurance

• Travelers

• Prologis

After Close:

• Alcoa

• CSX

• Kinder Morgan

Thursday

Before Open:

• TSMC (Taiwan Semi Conductor)

• UnitedHealth Group

• Huntington Bank

• American Express

After Close:

• Netflix

When will the earnings for the Magnificent 7 be announced?

• Tesla (TSLA): April 22, 2025

• Apple (AAPL): May 1, 2025

• Alphabet (GOOGL): April 29, 2025

• Microsoft (MSFT): April 30, 2025

• Amazon (AMZN): April 24, 2025

• Meta (META): April 30, 2025

• Nvidia (NVDA): May 28, 2025

This article was written by Greg Michalowski at www.forexlive.com.

I’m increasingly open to the idea that bitcoin could disconnect from the risk trade in light of risks around the US dollar and turmoil in the world.

There is a strong correlation between bitcoin and the Nasdaq that’s been established in the last two years but it’s not iron clad. At the moment there is an urge in the market to find dollar alternatives and that’s led to big bids in gold, the yen and Swiss franc. I can envision many scenarios where that extends to bitcoin and we could be seeing the start of that. He held up better in April than stocks and that’s shown it can pass the first test.

An asset like bitcoin tends to be a chameleon and a momentum trade. If it can get above $86K (or the April high of $88.6K), that momentum could really kick in. I think it’s too early to make that call but I’m watching carefully.

This article was written by Adam Button at www.forexlive.com.

Charlie Gasparino from Fox Business is out with an interesting tweet:

CEOs are speaking with the White House on the trade war; one told me that Trump has an open door policy and is listening to their concerns on the tariff impact on the economy and markets. The overwhelming fear expressed both to Trump and his aides is that the tariff war needs to end ASAP because it will stoke stagflation if it persists, a 5% yield on the 10-year bond, which carries a whole set of risks . Also, that Trump needs to quickly pivot to his growth agenda. The White House is said to have assured CEOs the pivot is happening and deals are being done. Also that there is plenty of room to negotiate with China. Story developing

That’s a good sign but I still want to know if 10% is the floor rate for tariffs because I don’t think that’s going to be good enough.

This article was written by Adam Button at www.forexlive.com.

This is a positive comment as the US tries to find a way to bring down tensions with China. For now, it doesn’t look like China is going to be the one dialing but this whole thing is incredibly stupid.

• The Treasury Secretary is keeping a very close eye on the bond market
• More than 15 trade offers already on the table

This article was written by Adam Button at www.forexlive.com.

• Oil rigs -9 to 480
• Gas rigs +1 to 96

With oil falling into the 50s this week, I think it cements that US oil production will fall this year. The US has already drawn down its drilled-but-uncompleted wells and Tier 1 inventory is scarce. The economics of new wells make it very tough to justify capital spending at even $65/barrel, add in the uncertainty and steel tariffs and oil companies are going to pull back on spending.

WTI crude is up $0.85 cents today is risk assets bounce, trading at $60.90.

This article was written by Adam Button at www.forexlive.com.

US 30-year yields are down 12 basis points from the highs and now trading lower on the day. That turnaround is salvaging global risk sentiment and leading to a rise in US equity markets.

The S&P 500 is now up 1.4% on the day to a session high.

The market may be sensing some good news on the US-China front as some soft feelers about phone calls are out there. Apple is one of the most China-sensitive companies and it’s trading up 4.6% and testing Wednesday’s high.

This article was written by Adam Button at www.forexlive.com.

Name a more toxic situationship than this. I’ll wait. With China’s retaliation today, it shows that Xi isn’t going to blink first and reach out. And from the looks of it, Trump also doesn’t want to budge from his position. But if something were to happen, market players will have to hope it happens soon. Because if not, it might be a long wait as Xi has a very busy schedule next week.

The Chinese president will be embarking on his first overseas tour this year where he will be visiting Vietnam, Malaysia, and Cambodia from 14 to 18 April. That’s hardly the time for him to consider such a call on his end. But if Trump really wants to talk, I’d imagine Xi would find a way to accommodate that. The question is will it happen?

As things stand, the ball is on Trump’s side of the court now. With a multitude of reasons hammering the bond market, the pressure is certainly on.

Time’s a-wasting. Is someone going to pick up the phone and dial?

This article was written by Justin Low at www.forexlive.com.

Closing changes on the day:

• Stoxx 600 -0.1%
• German DAX -1.2%
• France CAC -0.3%
• UK FTSE 100 +0.6%
• Spain IBEX -0.1%
• Italy’s FTSE MIB -1.0%

On the week:

• Stoxx 600 -%
• German DAX -1.5%
• France CAC -2.5%
• UK FTSE 100 -1.0%
• Spain IBEX -1.0%
• Italy’s FTSE MIB -2.0%

The volatility is breathtaking at the moment but it cooled a bit on Friday. Let’s hope that’s a sign of things to come.

This article was written by Adam Button at www.forexlive.com.

How is that for a headline?

If US 30-year yields wrap up the week at 4.94% or higher, it will be the largest one-week rise in 43 years. That number will feed directly into mortgage costs and corporate borrowing. I’d imagine spreads aren’t exactly behaving well in this environment either.

What’s driving it? It’s a combination of things:

• The basis/swaps trades blowing up
• Rising consumer inflation expectations
• Congressional hawks rolling over in the budget vote this week (larger deficits)
• Slowing US growth
• A loss of confidence in the White House’s grasp of economics
• De-dollarization
• A Fed that’s too worried about inflation to step in

Alone, each of those is something of a crisis but they’re all happening at once.

This article was written by Adam Button at www.forexlive.com.