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A review of the week's top global economic and capital markets news.
2025 started relatively calmly. But sentiment shifted drastically in early April following the U.S. administration’s April 2 (Liberation Day) announcements on steep tariffs, targeting countries across the world. This sparked extreme short-term volatility – on both the up and downside - for stocks and bonds.
The S&P 500 climbed over 60% for the two-year period between 2023 and 2024, the best in a quarter century. But it turned volatile in early 2025. While markets have concerns over the future of interest rate cuts from the Fed, we are tactically bullish on equities as earnings growth broadens amid a resilient U.S. economy.
History shows that markets do favour a divided U.S. government as a way to moderate any extreme policy tilts or spending plans.
We think the chances of a U.S. soft landing - a scenario of bringing down inflation to around 2% without widespread job losses - has improved. Our tactical position favours a slight overweight to equities and commodities as the U.S. economy slowly sheds the weight of high levels of real interest rates.
A gradual cooling of jobs and a slowdown in consumer prices improved the chances that major economies will avoid a recession. Looser monetary policy from major central banks is adding to hopes that equities will continue to climb.
Blowout U.S. job numbers and stubborn inflation stuck above 3% have pushed out the timing of rate cut expectations from the U.S Federal Reserve.
Tax rates stayed the same but there were significant changes to capital gains in this year’s budget. See our breakdown.
Equities and bonds finished 2023 with robust gains expecting a rate cut from the U.S. Federal Reserve in early 2024.
Equities suffered as borrowing costs hit multi-year highs. Tight financial conditions in the U.S. also hurt bond markets across the globe.
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