Tuesday Rebound in Financial Markets Looks Fragile In Face of Escalating Showdowns – Currency Thoughts
Tuesday Rebound in Financial Markets Looks Fragile In Face of Escalating Showdowns
April 22, 2025
President Trump has not been deterred by yesterday’s emphatic market thumbs-down against his attack on the Federal Reserve’s independence. Calling Fed Chairman Powell a “major loser,” Trump asserted that inflation is not now a problem but that the Fed’s indecision over lowering interest rates poses risks to economic growth.
Harvard University is suing key members of the Trump administration over the Hobson and unlawful choice demanding that the university either hand over control of its academic decision-making or lose all of its government funding while facing other sanctions.
India will be the next country to engage in bilateral talks with the U.S. on a trade deal. If such is not attained, the U.S. tariff on imports from India will nearly triple.
Chinese officials have threatened to retaliate against any countries cooperating with U.S. efforts to undermine Chinese economic and foreign policy interests.
The European Union is ramping up anti-trust action against U.S. high tech companies.
In spite of these and other escalations of geopolitical tension, the dollar and U.S. stock futures rebounded partly overnight after a brutal Monday session when many countries remained closed for the extended Easter holiday.
In pre-open futures trading, the DOW, SPX, Nasdaq and Russell 2000 have recovered about 1%. Share prices in the Pacific Rim had closed down 2.3% in New Zealand, 1.6% in Taiwan and 0.2% in Japan but up by 1.4% in Indonesai, 1.0% in Singapore, 0.8% in Hong Kong and 0.3% in China. Shares prices have so far risen 0.4% in the U.K. and Spain but fallen 0.8% in Italy and 0.2% in Germany and France.
Ten-year sovereign debt yields are up three basis points in Switzerland, two bps in Japan and the U.K. and a basis point in the United States but down two bps in France and a basis point in Germany, Spain and Italy.
A sign of continuing very high anxiety has been the extreme volatility in the price of gold, which touched a fresh record peak of $3,499 per ounce but whose net rise overnight has settled back to 1.2%. Bitcoin and WTI oil prices are 1.2% and 1.4% more expensive.
Consumer confidence in Belgium, Denmark, Turkey and the Netherlands fell in April to their weakest levels in 28, 24, 2 and 18 months.
Producer prices in South Korea flat-lined in both February and March, lowering their 12-month rate of increase from 1.8% in January to a 4-month low of 1.3% last month.
In Poland, producer prices dropped 0.3% on month and 1.1% on year in March. An 8.6% monthly leap in Polish industrial production was also reported, resulting in a 5-month higher 2.5% year-on-year increase last month.
Georgian PPI inflation of 5.5% in March was its slowest pace in 12 months and down from 20.3% at the end of 2021.
Moroccan consumer price inflation settled back from February’s 15-month high of 2.6% to a 3-month low of 1.6% in March.
Spain’s trade deficit widened 58% to EUR 9.6 billion in January-February compared to a year earlier. New Zealand’s trade balance, in contrast, improved from a NZD 929 million deficit in the first quarter of 2024 to a NZD 818 million surplus last quarter.
The combined euro area government deficit dropped to 3.2% of GDP in 2024 4Q from 4.0% of GDP a year earlier and 4.9% in the final quarter 2022. The ratio of outstanding government debt to GDP in Euroland was 87.4% in both 2024 4Q and full-2024. That ratio was only 62.5% in Germany but exceeded 100% in France, Italy and Spain and was slightly above 150% of GDP in Greece.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland debt and deficit to GDP ratios, Trump critical of Powell
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