📰 Market Report.
💰 Last night, the U.S. Federal Reserve signaled they are likely to deliver two quarter-point interest rate cuts later this year, the same median forecast as three months ago. The Fed kept the policy rate unchanged in the 4.25-4.50% range, but nine of the 19 policymakers expect it to be in the 3.75%-4.00% range by the end of this year. There was substantial disagreement among policymakers about the appropriate path of policy, reflecting uncertainty.
⚖️ Powell emphasized a cautious approach, stating, “We are not going to be in any hurry to move on rate cuts,” signaling a deliberate and patient strategy. He also touched on inflation dynamics, noting that “inflation has started to move up, partly in response to tariffs,” but reassured that the central bank’s “base case is that inflation will be transitory.” Highlighting the Fed’s adaptive posture, Powell remarked, “We are well-positioned to wait for better clarity”.
📉 The divergence between Michigan University future inflation perception and market reality has never been greater. The influence of the Democratic Party in the academic environment of universities could lead to a more pessimistic view of the economy, given the presence of the hated Trump in the White House.
🏦 The People’s Bank of China (PBOC) has held its one-year loan prime rate at 3.1% and the five-year rate at 3.6%, providing no fresh catalyst for markets to rally. This marks the fifth consecutive month that the key lending rates have remained unchanged, in line with market expectations. Both the one-year and five-year loan prime rates are currently at record lows, following reductions in October and July of last year. The unchanged lending rates from the PBOC led to a decline in Chinese stock markets, with the Shanghai Composite falling 0.2% to 3,420 and the Shenzhen Component dropping 0.3% to 10,940 on Thursday.
📊 Rate announcements from the Swiss National Bank, the Bank of England, and the Riksbank are expected later today.
💷 The Bank of England is expected to keep interest rates on hold on as it awaits the impact of U.S. President Donald Trump’s trade tariffs and the British government’s upcoming tax hike for employers. UK inflation is stuck firmly above the BoE’s 2% target, and the central bank has cut borrowing costs less than the ECB and the Fed since last summer, contributing to the country’s sluggish growth rate. The BoE is also monitoring the budget update speech by the finance minister, which is expected to announce cuts to public spending plans, a key component of Britain’s economic growth outlook. Reuters polls show expectations on the next cut likely in May and further reductions in August and November.
📈 The German PPI increased 0.70% in February, which was less than anticipated.
🌍 Geopolitics:
🇹🇷 Tension in Turkey: the arrest of Ekrem Imamoglu, Erdogan’s main rival, sparked massive protests and a sharp fall in the Turkish markets. Last night there were large demonstrations in Ankara and Istanbul.
⚛️ With regard to the peace negotiations on the war in Ukraine, the nuclear power station at Zaparozhia has become one of the key points of discussion. Russia is seeking to maintain control over the station, which is currently under its control, while Ukraine has demanded its return, considering it essential for reaching a peace agreement. In an unexpected turn of events, the United States has proposed a solution: that the nuclear power plant come under its control. As absurd as it may seem, this proposal would have a strategic objective: to dissuade Russia. If Ukrainian nuclear power plants were under US control, any attack or attempt to take them would imply a direct confrontation with the United States.
🛡️ Ukrainian President Zelenskyy asked U.S. President Trump for more air defense support to protect Ukraine against Russian attacks. But Trump said he would help locate the necessary military equipment in Europe. However, the ceasefire pause appeared in doubt, with Moscow and Kyiv accusing each other of continuing attacks on infrastructure and civilian targets. Despite the ongoing hostilities, the two sides carried out a prisoner exchange, with each side releasing 175 troops. Meanwhile, The EU is proposing to provide Ukraine with 2 million rounds of large-caliber artillery ammunition to support its defense efforts.
🇪🇺 In Europe, all EU leaders, except Hungary’s Viktor Orban, are expected to reaffirm their financial and military support for Ukrainian President Volodymyr Zelenskyy, who will address the next European summit via video link. The summit will debate European Commission proposals to boost military spending, pool resources on joint defense projects, and buy more European arms, though there are concerns about cutting out non-EU suppliers in the globally interconnected defense industry. The leaders will also address concerns about the EU falling behind the U.S. and others in the global tech race, with broad consensus on the goals but discord on certain key details.
📜 The European draft conclusions set multiple deadlines for progress in areas like reduction of bureaucracy, energy security, and climate neutrality.
🇫🇷 Given his increasingly low popularity in France, Macron is directing his efforts towards international problems: French President Emmanuel Macron returns to the spotlight, allowing him to shift gears and bring together allies to support Ukraine. Macron is on a collision course with Trump, as the U.S. president is framing the ceasefire as a way to unlock new business and political cooperation with Russia, while demanding a complete halt to weapons supplies to Ukraine. Macron has hosted military chiefs and defense ministers to galvanize European support for Ukraine and is working with UK Prime Minister Keir Starmer to bring together 37 countries to provide military support for Kyiv after a ceasefire. Macron’s domestic situation remains fragile, as he must find a way to finance France’s increased commitment to Ukraine without raising taxes or increasing borrowing.
📰 Forbes published an article that seemed to talk about the preludes to a world war, painting a discouraging picture: The impetus behind this spending boost in Germany is the desire to achieve “strategic independence” from the United States, as the U.S. under President Trump aligns more closely with Russian interests and leans on Ukraine to surrender to Russian aggression. If Russia defeats Ukraine, this German-led brigade and other European forces may be the only thing standing between a battle-hardened Russian army and the free countries of Europe.
🔎 WikiLeaks han sacado a la luz detalles impactantes sobre los registros desclasificados del asesinato de JFK. Según los documentos, la CIA ocultó la conexión entre James Jesus Angleton, alto funcionario de la agencia, y la inteligencia israelí. Además, se descubrió que Angleton ocultó información clave de la Comisión Warren sobre el asesinato de Kennedy. Antes de morir, Angleton dejó una declaración inquietante: “Cuanto mejor mentías y más traicionabas, más probabilidades tenías de ser ascendido”.
📉 Market View:
📊 The futures of the Mini S&P 500 seem to have reacted positively to Powell’s statements last night. Currently, the S&P 500 is at 5750 points, marking its highest level in almost two weeks. For its part, the Nasdaq 100 has managed to exceed 20,000 points again and is now trading at 20,050.
💵 Surprisingly, the dollar has shown little reaction to Powell’s speeches and the Federal Reserve’s publications. The dollar index (DXY) remains trapped in the 104 to 103 range established since the beginning of the month and is currently trading at 103.65. Consequently, the EUR/USD pair has not managed to clearly exceed the 1.09 level, falling back towards 1.0875 at the moment.
📉 In the US bond market, Powell’s words have caused a fall in yields, reflecting the expectation of a more moderate stance from the Fed on interest rates. With the confirmation of future interest rate cuts this year, the 2-year bond has fallen below a 4% yield, from the 4.10% reached yesterday.
🇪🇺 European futures remain solid, although without major advances. The DAX 40 is just a few points from its all-time highs, currently trading at 23,270 points, but with no signs of euphoria.
🥇 In the commodities market, gold futures have reached a new high of $3,065 per ounce, although they have fallen slightly to the current $3,050. On the other hand, Brent crude, which yesterday fell below $70 a barrel, has rebounded and is now trading at $71.15 a barrel.
₿ Finally, Bitcoin has shown significant momentum, strongly surpassing $84,000 and reaching a recent high of $87,470. However, it has fallen back slightly and is currently trading at $85,900.
