Markets Buoyed By News On Trade Talks And The Fed Chair

2025-04-29 02:35:00 ET

Summary

• Conciliatory words from the US administration helped financial markets rally last week, but we’re not at the end of this ride yet.
• Deeper cuts are priced for major central banks, but we think the European Central Bank and Bank of England have more flexibility than the Federal Reserve now.
• As households and businesses spend money before tariffs come into full force, it’s difficult to determine whether and when a US recession may be coming.

The 2025 roller coaster took an upward turn last week when President Donald Trump announced that he never had any intention of firing Federal Reserve (Fed) Chair Jerome Powell, when US Treasury Secretary Scott Bessent made concessionary comments around tariffs on China, and when Elon Musk commented that he would soon be stepping back from the Department of Government Efficiency (DOGE).

Can we get off the roller coaster now and find a tamer ride in the 2025 theme park? Doubtful. Markets have heard positive comments before, only to get another twist a few days or hours later. It’s certainly possible that we have passed the scariest part of this ride, but to think it may not have a few more corkscrews is naïve....

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