In the last two weeks, markets have reacted to mixed economic signals, with a slight GDP contraction and a surge in durable goods orders as businesses raced to get ahead of tariffs. As trade tensions evolve and central banks adjust policy, investors are shifting toward safe-haven assets amid rising uncertainty. Let’s dive in!
- Tariff Outlook Shifts: Markets rallied as the Trump administration signaled a potential softening of U.S.-China tariffs, though no formal talks have begun. Officials acknowledge current tariff levels are unsustainable, but clarity may not come until later this year.
- U.S.–EU Trade Outlook: President Trump and Italian Prime Minister Giorgia Meloni expressed strong confidence that the U.S. and Europe will reach a trade deal before the 90-day tariff pause expires. Both leaders emphasized their commitment to resolving disputes, with Meloni acting as a bridge between U.S. goals and EU interests.
- GDP Contraction Warning: U.S. economic output shrank 0.3% in Q1, largely due to a surge in imports ahead of Trump’s tariff implementation. The report signals mounting uncertainty as trade policy and inflation complicate the outlook for future growth and Federal Reserve action.
- Durables Surge Ahead of Tariffs: Orders for long-lasting goods rose 9.2% in March as businesses moved quickly ahead of President Trump’s new import tariffs. The sharp increase was driven by a surge in transportation equipment, particularly nondefense aircraft.
- Fed Chair Powell: President Trump said he has no intention of removing Jerome Powell before his term ends, easing concerns about political interference. Markets responded positively to the clarification, following heightened uncertainty around Fed leadership.
- ECB Cuts Rates: The European Central Bank lowered interest rates by 25 basis points to 2.25%, citing global trade tensions as a drag on growth. The bank noted weakening confidence and tighter financial conditions, even as inflation trends align with its 2% target.
- Buffett’s T-Bills: Warren Buffett’s Berkshire Hathaway now holds nearly 5% of the entire U.S. Treasury bill market, totaling $300.87 billion in short-term government debt. The move underscores Buffett’s deep preference for safety and liquidity amid market uncertainty.
- Gold & Cash Inflows: Investors are shifting toward safe-haven assets like gold and cash-equivalent ETFs as concerns rise over tariffs and economic uncertainty. April saw the strongest inflows into these areas since March 2023, signaling a broader move away from risk and toward capital preservation.
- U.S. Minerals Push: The Trump administration is weighing equity investments in U.S. mining firms and a federal insurance program to boost domestic production of critical minerals. Officials aim to reduce reliance on Chinese imports and stabilize supply chains through stockpiling and sovereign support tools.
- Chipotle Expands Abroad: Chipotle will open its first Mexican location in early 2026 as part of a broader international growth strategy. The move comes amid trade tensions between the U.S. and Mexico, where Chipotle still sources about half its avocados.
In the next two weeks, markets will focus on key data releases including the April jobs report and upcoming inflation readings, which could shape expectations for future Federal Reserve moves. On the geopolitical front, attention will turn to U.S.–China trade talks and escalating Middle East tensions, while political developments in Washington continue to influence investor sentiment.
Footnotes:
SFM Market Commentary: 5/2/25
In the last two weeks, markets have reacted to mixed economic signals, with a slight GDP contraction and a surge in durable goods orders as businesses raced to get ahead of tariffs. As trade tensions evolve and central banks adjust policy, investors are shifting toward safe-haven assets amid rising uncertainty. Let’s dive in!
In the next two weeks, markets will focus on key data releases including the April jobs report and upcoming inflation readings, which could shape expectations for future Federal Reserve moves. On the geopolitical front, attention will turn to U.S.–China trade talks and escalating Middle East tensions, while political developments in Washington continue to influence investor sentiment.
Footnotes: