US equity markets rallied and US bond yields rose yesterday, driven by stronger than expected economic data and talk of targeted Trump reciprocal tariffs. Higher bond yields in turn supported the dollar, which has regained ground against the euro and sterling to trade just below $1.08 and close to $1.29 respectively this morning. EURGBP continues to trend gradually lower, trading at around £0.8350 this morning.
Yesterday’s Events
Tech stocks led the rally in US equity markets with the Nasdaq gaining more than 2%, while the S&P 500 added almost 2%. Elsewhere, European and UK stocks ended slightly lower on the day, though they have opened in positive territory this morning. In bond markets, US yields rose by the best part of 10bps, more than reversing last week’s decline, while German and UK were largely unchanged.
Private sector economic activity in the US picked up in March according to the latest Purchasing Managers’ survey (PMIs), led by a reacceleration in activity in the services sector. The equivalent surveys for the Euro area and the UK point to subdued growth again this month in the former and a modest pick-up in the pace of growth in the latter.
Fed member Bostic says the impact of tariffs will delay the return of inflation to its 2% target, which in turn means that any cut in interest rates will “have to be pushed back,” adding that he thinks just one quarter-point reduction may be appropriate this year.
The Day Ahead
Looking to the day ahead, economic data due include the IFO Index of business confidence in Germany, which is expected to have improved this month according to the consensus forecast, and the Conference Board’s March survey of consumer confidence in the US (confidence has fallen sharply over the past three months amid worries about the impact of tariffs).
Today's Talking Points 25.03.2025
Market Commentary
US equity markets rallied and US bond yields rose yesterday, driven by stronger than expected economic data and talk of targeted Trump reciprocal tariffs. Higher bond yields in turn supported the dollar, which has regained ground against the euro and sterling to trade just below $1.08 and close to $1.29 respectively this morning. EURGBP continues to trend gradually lower, trading at around £0.8350 this morning.
Yesterday’s Events
Tech stocks led the rally in US equity markets with the Nasdaq gaining more than 2%, while the S&P 500 added almost 2%. Elsewhere, European and UK stocks ended slightly lower on the day, though they have opened in positive territory this morning. In bond markets, US yields rose by the best part of 10bps, more than reversing last week’s decline, while German and UK were largely unchanged.
Private sector economic activity in the US picked up in March according to the latest Purchasing Managers’ survey (PMIs), led by a reacceleration in activity in the services sector. The equivalent surveys for the Euro area and the UK point to subdued growth again this month in the former and a modest pick-up in the pace of growth in the latter.
Fed member Bostic says the impact of tariffs will delay the return of inflation to its 2% target, which in turn means that any cut in interest rates will “have to be pushed back,” adding that he thinks just one quarter-point reduction may be appropriate this year.
The Day Ahead
Looking to the day ahead, economic data due include the IFO Index of business confidence in Germany, which is expected to have improved this month according to the consensus forecast, and the Conference Board’s March survey of consumer confidence in the US (confidence has fallen sharply over the past three months amid worries about the impact of tariffs).
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