17/03/2025 Daily Reports
Fed’s Balancing Act:
- Jerome Powell must reassure markets about economic resilience while signaling readiness to act if needed.
Market Expectations vs. Fed Signals:
- The Fed is expected to keep rates steady (March 18-19), but traders anticipate three rate cuts in 2025, starting in June. Economists lean toward two cuts.
Inflation vs. Growth:
- Growth forecasts may be downgraded slightly.
- Core inflation could be revised up, making aggressive rate cuts tricky.
Market Jitters & Rate Speculation:
- S&P 500 plunged 10% from its peak before a slight rebound.
- 2-year Treasury yield hit a five-month low at 3.83%.
- VIX (fear gauge) spiked to August 2024 levels.
The Trump Effect:
- Trade war escalation fuels uncertainty.
- Tax cuts & deregulation could counter economic slowdown but may push inflation up.
The QT Dilemma:
- Fed may pause or slow balance sheet reduction.
- Policymakers are monitoring debt ceiling negotiations before making moves.
Key Events to Watch:
- March 17-20: Economic data releases (retail sales, housing, jobless claims, etc.).
- March 21: Fed speeches and insights on policy direction.
What’s Next?:
- The Fed is not in a hurry but must tread carefully. Markets need clarity, and Powell’s message will be crucial for setting expectations. The real question is: Will inflation let the Fed cut rates as much as the market hopes?
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Stocks Plummet as Trump Advisers Suggest No Market Intervention; Fed, Trade Anxiety Lingers
- S&P 500 futures dropped on Monday after Treasury Secretary Scott Bessent discounted recent stock losses as “healthy,” confirming that the Trump administration will not intervene to support markets.
- S&P 500 and Nasdaq 100 contracts dipped, with tech shares, including Nvidia, rising premarket ahead of its AI conference.
- Bessent’s comments rattled Wall Street, dashing hopes of government support with liquidity amid market uncertainty.
- Meanwhile, rising hopes of economic slowdown have supported bets on up to three Federal Reserve rate cuts this year, with investors monitoring retail sales data and the Fed’s policy meeting for more clues.
- The Bloomberg dollar index dropped to a four-month low as rate expectations shifted.
- Gold hovered near historic highs at $3,000 an ounce, and Treasury yields edged higher as concerns about trade war continued to spur haven demand.
- Oil prices jumped above $71 a barrel after US threats of military intervention against Yemen’s Houthi rebels raised the prospect of Red Sea shipping disruptions.
- In Europe, the Stoxx 600 rose 0.4%, extending its relative strength over US stocks, as German bond yields dropped ahead of a key parliamentary vote on a huge spending bill.
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Wall Street Looks for Direction After Weeks of Losses
– U.S. stock futures fell on Monday as investors entered a new trading week searching for fresh catalysts. The S&P 500 and Nasdaq posted their fourth straight weekly losses, falling 2.3% and 2.4% respectively, while the Dow dropped 3.1%, marking its worst week since 2023.
– The recent market weakness has been driven by rising recession fears and President Trump’s aggressive tariff policies, which continue to unsettle investors.
– This week, focus turns to key data and events: U.S. retail sales figures due Monday will offer insight into consumer strength, while the Federal Reserve is expected to hold interest rates steady in its policy decision on Wednesday.
– In the tech space, Nvidia CEO Jensen Huang will headline the GTC conference, where AI developments will be closely watched
