Outlook for the Week of April 21–25

The week of April 22–26 will be marked by ongoing trade tensions between the U.S. and China, a spotlight on PMIs in the U.S., Europe, and the U.K., and key earnings reports from Tesla and Alphabet—all set against a backdrop of volatility, safe-haven flows, and expectations of rate cuts.

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Key Points to Watch Out For:

• Tariffs continue to feature prominently on investors’ agendas.
• Preliminary PMI data from S&P Global could be particularly noteworthy.
• Treasury bond auctions will offer clues about market demand.
• Tokyo CPI and Canadian retail sales figures will also be released.

Trump’s Tariff Measures Keep Markets on Edge

Since the beginning of the month, headlines have been dominated by shifts in U.S. tariff policy under Donald Trump, overshadowing economic data. The president initially introduced reciprocal tariffs, then suspended their implementation for 90 days—maintaining a baseline rate of 10%, except for China, which faced a 145% levy. In response, China imposed a 125% tariff on U.S. imports, escalating the trade conflict.

Last Friday, the White House granted temporary tariff exemptions on certain Chinese electronic products. However, Trump soon hinted at new tariffs on semiconductors and pharmaceuticals, continuing an unpredictable approach that has unsettled markets. Despite this temporary relief for tech, stocks declined again this week, the U.S. dollar extended its drop, and investors turned to safe havens like gold and the Swiss franc. U.S. Treasuries saw heavy outflows before stabilizing in recent sessions.

Recession Fears Persist Amid Political Uncertainty

Boston Fed President Susan Collins reaffirmed the Fed’s readiness to support markets if necessary. Meanwhile, investors are pricing in around 90 basis points of rate cuts by 2025. Even so, recession fears remain high, though not fully priced in—JPMorgan estimates a 60% probability, while Goldman Sachs forecasts a 45% chance.

With a relatively quiet economic calendar ahead, the market focus will remain on trade-related headlines. A reversal of the tariff pause or a further escalation in U.S.–China tensions could trigger additional volatility, especially if U.S. allies are pressured to adopt similar measures.

Preliminary PMIs Will Provide Clarity

The key economic data this week will be the S&P Global preliminary PMIs for April across the eurozone, U.K., and U.S.

In the eurozone, business activity reached a seven-month high in March, and optimism around German infrastructure and defense spending may drive continued growth. However, evolving trade conditions in April could weigh on sentiment. A weak PMI could pressure the euro, although the ECB’s aggressive easing path—priced in at 85 basis points—may already be reflected in the currency. In addition, foreign holdings of U.S. assets could support the euro if repatriated during a broader dollar sell-off.

In the U.K., despite March’s softening CPI, markets still expect a 25-basis-point cut by the Bank of England in May and 85 bps in total by year-end. Strong PMIs may not deter the initial cut but could reduce expectations for subsequent easing. U.K. retail sales data will also be released on Friday, April 25.

In the U.S., attention will center on PMIs amid signals of economic contraction. The Atlanta Fed’s GDPNow model forecasts a 2.4% decline in Q1. Several Treasury auctions are scheduled this week, and investor demand will be closely watched following last week’s sharp bond sell-off.

Conclusion

In Asia, Tokyo’s April CPI will be released on Friday, April 25. Expectations for further rate hikes by the Bank of Japan have diminished due to tariff-driven volatility, with only 10 basis points priced in for year-end—down from an 80% probability of a June hike. Nevertheless, the yen has strengthened on safe-haven demand, pushing USD/JPY to its lowest since September.

In Canada, March retail sales data will also be released on Friday, April 25. The Bank of Canada kept rates unchanged this week and delivered a hawkish message, emphasizing the importance of price stability amid trade uncertainty. Markets now expect fewer than two rate cuts in 2025. Strong retail sales could reduce those expectations further and lend support to the Canadian dollar.

On the corporate front, Tesla and Alphabet (Google’s parent company) will report earnings on Tuesday, April 22, and Thursday, April 24, respectively, offering insight into the tech sector’s performance amid a volatile quarter.