Summary
United States: Thank you for your attention to this matter!
- Economic data releases took a back seat to trade policy changes again this week, with President Trump declaring a 90-day pause on many of the “reciprocal” tariffs announced on April 2. The pause still leaves the United States in a materially higher tariff environment than any time in the past century. Inflation data for March were softer than expected and sentiment data continued to deteriorate. Congressional Republicans moved forward with a reconciliation bill that promises fiscal stimulus in 2026.
- Next week: Retail Sales (Wed.), Industrial Production (Wed.), Housing Starts (Thu.)
International: Foreign Central Banks in Dovish Mood as Trade Tensions Persist
- Foreign central banks remained in an overall dovish mood this week amid ongoing trade uncertainties, as the Reserve Bank of New Zealand, Reserve Bank of India and Philippine central bank all lowered interest rates, while suggesting further easing to come. Mexico’s benign CPI should also see another rate cut in May, while firm inflation and activity data should see Brazil’s Cental Bank hike rates at its next meeting.
- Next week: China GDP (Wed.), Bank of Canada Policy Rate (Wed.), ECB Policy Rate (Thu.)
Interest Rate Watch: What Is Going on in the Treasury Market?
- After an initial plunge following “Liberation Day,” longer-term Treasury yields have risen this week and are now higher than they were on April 1. What is going on in the U.S. Treasury market?
Topic of the Week: Tariff U-Turn Puts China in the Hot Seat
- On April 9, President Trump announced a 90-day pause to his “reciprocal” tariff plan just hours after it went into effect, replacing the country-specific rates with a 10% baseline tariff on most countries. China is the main exception, with Trump adding additional tariffs to bring the country’s effective tariff rate to 145%.
