Investors head into the new week with markets reeling from last week’s historic selloff and few signs of relief in sight.
A combination of unresolved US trade policy, looming inflation data, and a flurry of Federal Reserve commentary promises another turbulent stretch for global markets.
“This should be the buying opportunity of the century,” said Kathleen Brooks, research director at XTB.
But few investors are optimistic. The downturn follows the Trump administration’s decision to hold firm on sweeping new tariffs unveiled last week. According to Deutsche Bank, the US tariff rate now sits at around 25%—its highest since the early 1900s—raising the risk of recession while simultaneously driving inflation higher.
“Should these measures remain in place for a significant period of time, they could potentially shave 1 to 1.5 percentage points from growth this year,” Deutsche Bank analysts warned in a Monday note. “At the same time, they could add a broadly similar amount to core PCE inflation.”
CPI, PPI due
The economic calendar this week is headlined by the Consumer Price Index (CPI) on Thursday and the Producer Price Index (PPI) on Friday. Deutsche Bank expects core CPI to rise 0.26% in March, slightly above February’s 0.23%, with goods inflation likely boosted by consumers front-loading purchases ahead of higher prices.
Friday’s PPI report is forecast to mirror CPI trends, with a 0.3% rise in core prices.
In parallel, the Fed speaker calendar is packed. Governor Lisa Cook will discuss inflation dynamics Monday, followed by appearances from San Francisco’s Mary Daly, Richmond’s Tom Barkin, and Chicago’s Austan Goolsbee throughout the week. New York’s John Williams and St. Louis’s Alberto Musalem are set to speak Friday—after the CPI data.
Fed Chair Jerome Powell struck a more hawkish tone last week, noting that “tariffs are highly likely to generate at least a temporary rise in inflation,” and that the effects could persist. “Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored,” he said.
Kathleen Brooks sees the current moment as critical. “The market is looking for concrete action, not talk of action,” she said. “The best panacea for financial markets right now would be a pause or reversal from the US on its tariff program.”
White House doubles down
Investor hopes were briefly lifted by a social media post from hedge fund manager Bill Ackman, who predicted a possible pause in the tariff implementation to allow for deal-making. But White House officials offered little optimism over the weekend, with Treasury Secretary Scott Besant calling for patience and Commerce Secretary Howard Lutnick doubling down on the necessity of tariffs.
Brooks noted that a reversal on tariffs could “spark a wholehearted rally, especially in stocks,” but added, “It’s always risky to rely on a tweet for market advice.”
Last week’s market carnage has been staggering. The S&P 500 lost more than $5.4 trillion in market value in just two days. The Nasdaq 100 officially entered bear market territory, and the tech-heavy “Magnificent 7” stocks plunged more than 10%. Bond markets priced in recession risks, with the 10-year yield falling below 4%, and the yield curve flattening sharply.
Gold, often a safe haven, was not spared either, falling 3% on cross-asset de-risking despite remaining above $3,000 an ounce. “Even the gold price is down,” Brooks noted, “as capitulation hit markets.”
In the absence of clear policy reversal from the White House, Deutsche Bank expects no immediate circuit breaker. “It may be some time before the fog of the trade war lifts,” analysts wrote, adding that uncertainty around the administration’s pending tax plan also complicates the Fed’s policy path.
Until clarity emerges, both investors and policymakers are flying blind. And as Brooks summed up: “The main theme dominating global financial markets more than anything else is US trade policy uncertainty.”