All eyes will be on US Fed Chair Jerome Powell today. Powell will be speaking at the Federal Reserve Board’s International Finance Division 75th Anniversary Conference in Washington at 1 pm on May 2. The opening remarks by Powell can be watched live on the US Fed website.
Last week, Powell was at the White House to meet Trump. The meeting’s agenda, according to a statement from Powell’s office, was “to discuss economic developments, including for growth, employment, and inflation.”
Powell’s address, scheduled for Monday, is expected to provide insight into the Federal Reserve’s monetary policy position. Market investors will be looking for signals on future rate decisions, particularly given potential adjustments under Trump’s policies and economic uncertainty.
Fed Chair Jerome Powell’s comments will also influence market sentiment, providing insights into the health of the US economy and future monetary policy direction.
Despite continuous economic uncertainties, consumer spending in the US is still strong. The PCE inflation for April was consistent with forecasts. The 10-year U.S. Treasury yield dropped below 4.5% during the week, but the 30-year yield stayed near 5%.
It seems the ground for rate cuts is in the making. US Federal Reserve Governor Christopher Waller anticipates interest rate cuts later this year. “Assuming that the effective tariff rate settles close to my lower tariff scenario, that underlying inflation continues to make progress to our 2 percent goal, and that the labor market remains solid, I would be supporting ‘good news’ rate cuts later this year,” Waller said.
The next Two-day FOMC Meeting is on June 17-18, where the US Fed is likely to keep rates unchanged. Before that May 2025 CPI data are scheduled to be released on June 11.
The European Central Bank will take center stage this week. If economists’ expectations are correct, the central bank is anticipated to decrease interest rates by a quarter percent on Thursday.
In the United States, employment numbers for May will be revealed on Friday. Markets will also be eyeing China’s manufacturing and services PMI data for May, which is coming midweek. Quarterly earnings announcements will be scarce, but U.S. chip giant Broadcom’s results on Thursday evening are expected to be exciting.
US stock futures fell marginally on Monday as investors sought fresh triggers at the start of a new trading month. The drop comes after the S&P 500 rose 6.15% in May, its largest monthly increase since November 2023. The Dow and Nasdaq Composite both gained 3.94% and 9.56%, respectively.
Despite persistent tariff-related challenges, markets were encouraged last month by good US economic statistics and higher-than-expected corporate results.
Investor sentiment was further strained by judicial developments in trade policy, as a federal judge initially overturned President Donald Trump’s reciprocal tariffs, only for an appeals court to temporarily reinstate them.
“Global markets remain highly sensitive to shifts in trade policy, inflation dynamics, and political developments. While investor sentiment improved in some regions, legal uncertainties, employment softness, and lingering geopolitical friction underscore the fragile nature of the current recovery, ” says Bas Kooijman, CEO and Asset Manager of DHF Capital S.A.
Meanwhile, economic adviser Kevin Hassett suggested that Trump and Chinese President Xi Jinping could begin trade talks as early as this week. This comes after Trump accused China of breaking the terms of a recent trade deal.
