Nomura – The Week Ahead

As trade tensions show signs of softening and financial markets stabilise, we discuss the recent changes to our central bank views for both the European Central Bank and Bank of Japan, and outline our thinking on recent US-Japan trade negotiations. In this episode, we also preview the upcoming US labour market data and discuss what the election in Canada may mean for the economy and markets. Chapters: Europe (02:19), Japan (05:53), Asia (11:02), US (12:23).

We have seen some calm return this week, which has coincided with President Trump making some tariff concessions for tech companies and for auto parts, suggesting that a 'Trump put' is in play, and with the President also signalling “big progress” in talks with Japanese officials. However, we have to say this is an uneasy calm; new sectoral tariffs are still likely coming and tensions with China remain elevated. We discuss the latest tariff twists and turns, fresh communication from Fed Chair Powell and upcoming US data, as well as the ECB’s recent 25bp rate cut. Across Asia, we will look out for Bank Indonesia’s policy meeting, Korea export data and Tokyo CPI. Chapters: US (02:16), Europe (08:47), Asia (13:13).

Global financial markets remain on edge after a rebound from the 90-day pause on US reciprocal tariffs for most countries except China. In this episode, we discuss the path forward for negotiations with US trade partners. We also discuss Europe’s changing stance to negotiate rather than retaliate, and the ECB looking set to cut again next week. In Asia, we outline the posture from Beijing, with the Q1 GDP data also on tap.  We end with a special segment with Rob Subbaraman, Head of Global Macro Research, who offers his perspectives on major global questions, including how damaging the ‘tariff shock’ could be on global growth, and possible reasons behind the on-going decline in US asset prices. Chapters: US (02:08), Europe (07:30), China (12:25), Rest of Asia (17:48), Tariffs (19:16).  

It’s been another tumultuous week in financial markets following President Trump’s tariff announcements on 2nd April. Tariffs were broad and generally larger than expected and financial markets did not digest them all that well, although some resilience in US labour market data appears to be curbing some of the downside for now. In this episode, we will go into the detail of what trade policy is being implemented and what it means for various economies. Chapters: US (01:27), Europe (09:00), Asia (14:01), Australia and New Zealand (20:15). 

In the week to date, US bond yields are a little higher across the curve, and the USD has been a little stronger too, while equities really have had a couple of up and down days. Another big theme for global markets has been around the idea of US exceptionalism, that took a dent as some US data printed weaker, Europe data looked better, and as China and Europe announced some stimulus plans over prior weeks. For the week ahead, it really is crunch time with April 2 tariff announcements just around the corner. Chapters: US (01:56), Europe (10:47), Asia (13:59).

Financial markets have been difficult to navigate, with equity markets bouncing from their recent lows but still seeing sizable intraday swings. Interest rates seem to be similarly caught between potential upside inflation risks from some sources, and challenging growth dynamics on the other. And all of this comes ahead of the April 2nd tariff announcements from the US which also have the potential to jolt markets further. In Europe, we look for further signs that German’s fiscal reform is feeding into stronger growth expectations, while the UK’s fiscal room looks more constrained. In Asia, we discuss likely policy responses in Indonesia, Thailand and Singapore. Chapters: US (02:08), Europe (11:05), Asia (15:31).

Market participants continue to grapple with a very high degree of uncertainty which is starting to have real economic consequences. The week ahead should be very interesting with key central bank decisions, and we could get some guidance on how policymakers think about and deal with the uncertainty, particularly from rising global trade tensions. We share our expectations for an on-hold decision at the upcoming FOMC meeting, and for the Fed’s tone to continue to emphasize patience. We also expect a pause from the BOE’s cutting cycle. Lastly, we discuss why communication is a bigger focus this time from the BOJ’s meeting where a skip in the hiking cycle is widely expected. Chapters: US (01:53), Europe (10:39), Japan (16:43), Asia (21:22).

 Markets have seen sizable moves as the US administration ramped up tariffs and Germany announced a huge fiscal package. (02:30) With US tariffs hitting last week, we discuss what is actually in place, what is likely to come and the impact on the US, China and Europe. (15:15) Germany’s fiscal stimulus is having a major market impact and should meaningfully raise growth, inflation and ECB expectations. (20:15) We also preview next week’s inflation data out of the US and China.

It’s a big week for China with all eyes on the National People’s Congress (NPC), where fiscal measures could be announced. We outline our expectations and whether the NPC could potentially provide a lift in market sentiment. In the US, we preview the February employment report and its impact on Fed policy, and digest the latest announcements on tariffs. In Europe, we discuss our expectations of the ECB, where we go from here after the German elections and what is Europe’s next move around the peace deal. Chapters: US (02:10), Europe (07:40), Asia (15:45).

Market sentiment is surprisingly robust, with equity markets holding steady despite geopolitical tensions. Focus shifts to U.S. inflation data and political developments, while Europe grapples with election outcomes and military spending demands. In Asia, central banks are set to meet, with implications for monetary policy and economic growth as China’s PMI data looms. Meanwhile, India's GDP growth is projected modestly, raising differing perceptions of its economic health.