Market setup trumps brewstagflation

By Jamie McGEEVER Orlando, Florida, – – Handaging makes sense of the forces that float worldwide markets through Jamie McGEVER, columnist Markets If someone wants a momentary up to the close place where the US economy and policymakers are now, they got it on Friday at the University of Michigan. The results were striking: Consumer sentiment expectations are now the lowest since 1980 and one year inflation expectations are the highest since 1981, above 6%. Sentiment recordings are only ‘soft’ data and there are many debates whether it is the ‘hard’ activity data such as retail sales and rental. Fed chairman Jerome Powell said earlier this month that the connection between the two in recent years was “weak” and he had previously delayed the U-Mich inflation expectancy figures. But the direction of travel becomes harder to ignore. Consumers are haunted by President Donald Trump’s trade war and the peace rates will raise prices, forcing them to limit expenses. If this soft data filters in the hard data, the economy could be in the grip of ‘stagflation’ later this year. It questions the sudden optimism that has been over financial markets after the US ceasefire. It is difficult to believe that it has been less than a week since the world’s two largest economies have agreed to lower reciprocal rates and keep 90 days on the break. The velocity with which economists increased their growth predictions on the detent, and the extent of the rally over financial markets, was quite striking, as the damage of the rates had not yet felt and the amount of uncertainty still hanging. But markets have smeared everything aside and ended a remarkable week on a strong foot. The S&P 500 and Nasdaq rose by 5% and 7% respectively to their highest in two months, and the Nasdaq has been up 30% since April 7. The Dow’s setback means it has its ‘liberation day’ losses and is now flat for the year. Other markets have also moved a lot. Germany’s DAX hit a record high and is also 30% higher than the April low, the MSCI World Index rose in 17 of the past 19 sessions, and the safe Haven gold fell by 4%, its strongest weekly loss this year. The US and European earnings season is in order, and although some major firms have issued guidance or profit warnings due to tariff uncertainty, the results and the prospects were in general positive. So it seems that renewed growth optimism is partly behind the backlash in bond yields. The expectations and forecasts of the rate cut and forecasts for further Chinese stimulus have been traced back, increasing the yields of the mortgage in both countries and further. But US fiscal concerns are also breeding, and Friday Republicans rejected President Donald Trump’s tax package because it was not far enough to spend cutting. Look at this space. With a view to how difficult it is to make economic predictions in these very uncertain times, this week some major data surprises have gained strong British GDP growth in the first quarter, weaker-than-expected GDP in Japan, and the steepest drop in US producer prices since 2009, you would not be against similar surprises. I would love to hear from you, so reach out to comment. You can also follow me at @reudersjamie and @reutersjamie.bsky.social. The most important market of this week * The Nasdaq is rising by 7%, one of its best weeks in recent years. * Great Technology boom – The Roundhill ‘may take 7’ ETF almost 10%. * Gold has dropped 4%, its worst week since November. * Dollar index increases by 0.8%, its fourth consecutive profit and the best week since February. Chart of the week I wrote earlier this week about why the ‘Global South’ can benefit if the era of ‘American exceptional’ and the world economic order of recent decades comes to an end. The global South holds all the investment risks associated with emerging markets, but boasts attractive demographics, strong growth rates and is rich in natural resources. It strikes far below its weight in financial market terms, so should investors increase their exposure? One chart that popped up this week indicates that the ball is already rolling on the role of stocks. What’s more, the momentum behind it also looks pretty strong. Is a paradigm shift in progress? Here are some of the best things I read this week: 1 World Economics Now. May 2025. Put Trump’s trading reinforcement in place – Adam Tooze 2. American Exception Meet his Maker – Barry Eichengreen 3. The Tracking of Federal Expenses in Real Time 4. Trump’s Rates are not about dolls 5. US -aid loss for millions that can move in storage, which can move on Monday? * China Fixed asset investment, industrial production, retail sales, house prices, FDI * Feeding officers spoke on various occasions, including: Chicago Fed President Austan Goolsbee, president of New York Fed John Williams, the president of Atlanta Fed, Raphael Bostic, and Dallas Fed -President is that of the author. It does not reflect the views of Reuters News, which are linked to integrity, independence and freedom of prejudice under the trust principles. The trading day is also sent by e -mail every weekday morning. Do you think your friend or colleague should know about us? Send this newsletter to them. They can also report here. This article was generated from an automated news agency feed without edits to text.