“Liberation day” is almost upon us. Wednesday is the day many of the long-discussed tariffs finally come into effect, although their full scope still remains somewhat of a mystery. Some elements were made relatively clear, such as the 25% import duties on foreign-made vehicles. Other measures, targeting Mexico, Canada and China, also appear to be set in stone. Beyond that, the proposed trade structure with the EU and the rest of the world is still anyone’s guess.
US stock markets are clearly on edge, as evidenced by last Friday’s performance. The latest PCE Price Index did nothing to improve matters, revealing an unexpected uptick in core inflation. Excluding food and energy, prices grew by 0.4% in February, surpassing both expectations and the January figure of 0.3%. Ten basis points above predictions is hardly the end of the world, but markets could have done without it given the current environment. All three major indices wasted no time capitulating, the Dow falling 1.7%, the S&P 500 losing 2% and the Nasdaq Comp leading the charge with an impressive 2.7% decline.
Ever the optimist, gold was all too happy to navigate the ominous conditions, rising to yet another record high of $3,086 an ounce on Friday. The precious metal has picked up right where it left off this morning in the Asian session, pushing all the way to $3,111. Gold has gone from strength to strength so far this year and has cemented its status as a safe-haven for troubled money. The same cannot be said for Bitcoin, which continued to bleed over the weekend and is now once again staring down the barrel at $80,000 per coin.
The coming week promises to be a harsh one for traders. Today marks the last day of the quarter and although the economic calendar has very little to offer, unexpected tariff news could mark a dramatic end to Q1. The mid-week is dominated by manufacturing and services PMIs as well as the latest JOLT survey, but the regular schedule may be overshadowed by the enactment of the new tariff regime. As if that were not enough, Non-Farm Payrolls grace us with their presence on Friday.
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