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Weekly Market Preview
Friday, 25th of April 2025
This week, investors will follow the upcoming release of the US Personal Consumption Expenditures data for March—the Federal Reserve’s preferred measure of inflation. The data is expected to show a decline in the core PCE (excluding energy and food) to its lowest annual level in several years, falling from 2.8% in February to 2.5% in March and the headline PCE is also projected to decrease from 2.5% to 2.2%.
Inflation remains a key concern for the Federal Reserve, especially following recent comments from the Fed Chairman warning that new tariffs could intensify inflationary pressures. As a result, members of the Federal Open Market Committee will consider various factors, including the impact of tariffs on inflation and the broader US economy, when shaping future monetary policy.
Meanwhile, traders will wait the preliminary European Consumer Price Index data for April. The YoY inflation in Europe is expected to ease from 2.2% in March to 2.0% in April. A major contributor to this decline is the recent drop in energy prices, with Brent crude oil hitting multi-year lows of $58.44 per barrel. Weaker-than-expected inflation data would support the European Central Bank’s policy of lowering interest rates to stimulate economic growth, especially amid concerns that the Trump administration’s tariffs on European imports may be weighing on growth prospects.
In Asia, the Bank of Japan is set to announce its interest rate decision. Markets widely expect the central bank to maintain rates at 0.5% while addressing the potential risks associated with the new US tariffs. However, this is unlikely to change Japan’s focus on wage growth. Notably, the YoY inflation in Japan reached a two-year high of 4% earlier this year before easing to 3.6% in March. As a result, markets have started to price in a possible 25-basis-point rate hike by the BoE, potentially in the third quarter of this year.
Later in the week, attention will turn to the US non-farm payrolls report, which plays a crucial role in guiding the Fed’s policy decisions. March’s jobs report showed that the US economy added 228,000 jobs, while the unemployment rate rose from 4.1% to 4.2%. According to Bloomberg, April’s report is expected to show 170,000 new jobs, with the unemployment rate holding steady at 4.2%.
The Federal Reserve will be watching this report closely. A slowdown in job creation combined with rising unemployment would signal labour market weakness, something the Fed cannot ignore. If the data disappoints and unemployment increases, the likelihood of an interest rate cut will rise soon.
Monday, 28th of April
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