🚨 Market Report.
📈 The selloff in U.S. Treasuries has picked up pace, with the 10-year note yield rising to 4.45%, gaining about 45 basis points in the week – the biggest increase since 2001. this sharp selloff in Treasuries could be a signal of weakness in the dollar as a sign of faltering confidence in the world’s biggest economy. The weekly increase in 30-year bond rates is expected to be the largest since at least 1982. The bond market’s erratic response this week has raised doubts about Treasury bonds’ standing as the safest asset in the world. The increase in premiums on US bonds, together with a fall in the dollar, could be reflecting an outflow of money from the US economy.
💰 Commodities like gold have surged to record highs on safe-haven flows, while oil prices have slipped on concerns about the prolonged U.S.-China trade war.
🇺🇸 The Trump administration’s protectionist policies, the growing U.S. debt pile, and the undermining of the global economic order as factors chipping away at the dollar’s appeal. This could undermine its position as the world’s reserve currency.
🔄 However, once again, we repeat that Trump’s strategy, if it works, could reverse all this. Yesterday Trump again suggested that the tariff revenue, around 800 billion dollars a year, could be used to pay off the debt, reduce taxes or fuel domestic investment. Remember that US consumption is twice as big as that of the whole of Europe and more than double the size of China’s.
🏗️ We have also mentioned in previous reportes the plans of different industries to increase their production or invest hundreds of billions of dollars in the US to avoid tariffs. If these plans are carried out, the US GDP will increase considerably, once again attracting capital from the rest of the world, especially considering the deep political and economic crisis that Europe is going through despite the silence of the media.
🤝 U.S. Treasury Secretary Bessent tried to assure skeptics yesterday, saying over 75 countries want to negotiate trade deals, and Trump expressed hope of a trade deal with China. However, the uncertainty in the meantime has led to volatile trading.
🇨🇳 China rejected what it called “threats and blackmail” from the U.S. and pledged to follow through if the U.S. persists, though it said its door was open to dialogue based on mutual respect.
📊 Despite Trump’s 90-day tariff pause on dozens of countries, the overall average import duty rate remains the highest in over a century, according to researchers. The EU has paused its counter-tariffs for now, but uncertainty remains a threat to trust and growth.
🇪🇺 In Europe, negotiations with the U.S. are handled by the European Commission, and a potential deal could involve the EU’s proposal of zero-tariffs on all industrial goods. However, a no-deal outcome is also possible, which would leave the response in the hands of the 27 EU governments to help the hardest hit industries like steel, aluminum, cars, timber, and pharmaceuticals.
⚡ There may yet be a more devastating scenario for Europe. As I mentioned in previous reports, Meloni, the Italian PM, will visit Trump separately next week, she is not the official EU interlocutor, and Lithuania’s energy minister Zygimantas Vaiciunas suggests the European Union should look at tweaking its methane rules to make it easier to import more U.S. liquefied natural gas (LNG). What would happen if different European nations started to make separate agreements or if Trump offered them different deals, triggering a division in the EU?
🔐 As an example of how this scenario is possible, I would remind you that with the sanctions on AI and high-tech microchips that Trump imposed, several layers of security were created. France and Germany were in group 1, they could import US technology without restrictions, but Poland was in group 2, and obviously China and Russia in group 3 with the toughest restrictions. Trump created different layers within the EU, treating EU member countries differently, and this could generate division between them.
🛡️ To determine how to fund the bloc’s military build-up in the wake of the “threat from Russia” and the US’s waning commitment to transatlantic security, EU finance ministers are gathering in Warsaw. A fundamental inquiry is how the European Commission will persuade the populace to embrace the new EU fiscal regulations in order to raise around €600 billion from state budgets.
🩺 As some European politicians have already admitted, this fiscal effort will reduce public services, the money has to come from somewhere. But is the threat of Russia invading Europe real enough to take away social services from citizens? A protest in Italy last week chanted, “we need more hospitals, not more missiles”.
🚨 The European authorities issued various alert messages warning citizens to be prepared with emergency kits in case of catastrophes or attacks, but they will need something a little stronger to frighten citizens once again, otherwise they might be reluctant to let them take their savings away for another ‘new cause’.
📉 According to a Bloomberg survey of economists, European Central Bank (ECB) officials are likely to cut borrowing costs twice more – in April and June – before the deposit rate stays at 2% at least through the end of 2026. “Monetary policy is now set by Trump” and the ECB will have to adapt.
📉 Risks to the euro-area’s growth outlook are seen skewed to the downside for 2023 and 2024, before higher infrastructure and defense spending, boosts demand.
🔪 Despite threats from Treasury Secretary Scott Bessent this week, quoting the Spanish government, suggesting to Europe that a turn towards China would be like ‘cutting one’s throat’. Spanish Prime Minister Pedro Sanchez, visiting China, said yesterday that Spain will work to build “solid and balanced” relations between China and the European Union. Sanchez has used this China trip, his third in two years, to push for deeper trade ties with Beijing and criticize the U.S. tariffs as “unjustified, unjust and harmful for everybody.”
🇩🇪 The German economy is expected to see only 0.1% growth in 2025, following two years of contraction, according to the country’s leading research institutes. This is less than the 0.8% growth predicted in September. The institutes cite “geopolitical tensions and the protectionist trade policy of the USA” as exacerbating the already tense economic situation in Germany. They also highlight increased international competition, especially from China.
🔧 Germany’s business model has been challenged by higher energy costs due to the war in Ukraine, as well as structural weaknesses like skilled labor shortages and excessive bureaucracy. For 2026, the institutes expect an additional 24 billion euros in expenditure, which they estimate could raise output by about half a percentage point. A real disaster for Germany and for Europe, for which the bellicose stimuli of war alone seem to be the only solution.
📈 Market View:
📈 Yesterday’s upward rebound failed and reversed part of the recovery achieved with the announcement of the postponement of tariffs. However, today’s European opening shows positive signs. Mini S&P 500 futures are back on an upward trend and are currently trading at 5,370 points. Nasdaq 100 futures, meanwhile, are also moving upwards and are above 18,750 points.
📊 In Europe, the DAX 40 is advancing and is currently above 21,000 points. EuroStoxx 50 futures managed to rise to 4,800 points after yesterday’s setbacks. In short, the market is trying to return to normal.
💵 The news includes the dollar’s loss of value yesterday, when the dollar index fell below 100 points. At the moment, it is holding above 100.50 points. This weakening has led the euro/dollar to rise to 1.1380 in the last few hours, from where it has fallen back to 1.1265 at the moment.
🛢️ Crude oil weakened yesterday, but is currently back on the rise. A barrel of Brent is trading at $64 and West Texas at $60.75.
🥇 The weak dollar has pushed gold above $3,200 an ounce, reaching $3,240. According to our charts, this would represent the peak of the upward trend of recent months, which could lead to setbacks in the coming sessions from these levels.
₿ Bitcoin fell during yesterday’s session to around $78,800, but has rebounded in recent hours to around $81,000.
