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The Economic Calendar:
MONDAY: S&P Global Composite PMI (8:45a CT), ISM Services Index (9:00a CT), 3-Year Note Auction (12:00p CT)
TUESDAY: LMI Logistics Managers Index (5:00a CT), Balance of Trade (7:30a CT), Redbook (7:55a CT), RCM/TIPP Economic Optimism Index (9:10a CT), 10-Year Note Auction (12:00p CT), Scheduled 2-Day FOMC Meeting Begins
WEDNESDAY: MBA Mortgage Applications (6:00a CT), Used Car Prices (8:00a CT), EIA Petroleum Status Report (9:30a CT), FOMC Announcement (1:00p CT), Fed Press Conference (1:30p CT), Consumer Credit Change (2:00p CT)
THURSDAY: Jobless Claims (7:30a CT), Wholesale Inventories (9:00a CT), EIA Natural Gas Report (9:30a CT), 30-Year Bond Auction (12:00p CT), Fed Balance Sheet (3:30p CT)
FRIDAY: Fed Williams Speech (5:15a CT), Fed Barr Speech (5:45a CT), Fed Kugler Speech (7:30a CT), Fed Goolsbee Speech (9:00a CT), Fed Waller Speech (10:30a CT), Fed Williams Speech (10:30a CT), Baker Hughes Rig Count (12:00p CT)
Key Events:
The Federal Open Market Committee (FOMC) is meeting on Wednesday, and interest rates are expected to remain unchanged. Market indicators suggest only a 3% chance of a rate cut at this meeting. However, many anticipate a rate cut occurring in June. This likely outcome will anger U.S. President Donald Trump, who reiterated his demand for the Federal Reserve to lower interest rates this week.
Stock index futures capped a robust week with a flourish, as the benchmark S&P 500 concluded Friday with its ninth consecutive day of gains—the longest winning streak since November 2004. The S&P 500 futures advanced 3.67% for the week, while the tech-heavy Nasdaq 100 futures climbed 4.6%.
Trader sentiment was buoyed by strong quarterly earnings reports and encouraging rhetoric surrounding tariffs and international trade, including emerging signs of a thaw in U.S.-China relations.
Traders also digested a slate of economic data that illustrated the tangible effects of tariffs, most notably the first quarterly contraction in U.S. GDP (economic growth) since the beginning of 2022. The strong jobs report and positive developments on the trade front are providing a tailwind.
The earnings season saw key reports from several technology bellwethers, including Magnificent 7 constituents Microsoft, Meta Platforms, Apple, and Amazon. Microsoft and Meta delivered particularly strong quarterly results and provided forward guidance that eased some concerns about the economic outlook. Both companies also reaffirmed their commitment to significant investments in artificial intelligence (AI). Conversely, analysts expressed apprehension regarding the potential impact of tariffs on Apple’s gross margins, while Amazon’s slightly cautious guidance for the current quarter fell short of some expectations.
Signals that China may be considering measures to address the Trump administration’s concerns regarding its role in the fentanyl trade add a layer of cautious optimism to the broader market sentiment. This development is seen as a potential off-ramp from current hostilities, paving the way for the resumption of trade talks and injecting a degree of optimism into the market.
The FOMC interest rate decision and press conference are on Wednesday. Traders expect no move in rates, but are interested in the press conference narrative and comments from Fed Chair Powell and other FOMC members.
Despite a strong jobs report on Friday that fueled gains in the equity market, the U.S. Treasury market reacted negatively, with yields surging across the curve. The two-year Treasury yield vaulted an additional 13 basis points to 3.83%, following a 10 basis point increase on Thursday. The yield on the long bond also accelerated, rising to 4.79% from 4.74% the previous day.
Friday’s non-farm payrolls session offered a mixed bag for investors. While the robust employment data provided a vote of confidence in President Trump’s economic outlook, it simultaneously drove up the cost of government borrowing. The two-year Treasury note, closely reflecting the Treasury’s shorter-term funding costs, rose by 14 basis points. This increase translates to an additional annual cost of approximately $51 billion on the nation’s $37 trillion debt, highlighting the scale of the fiscal challenges facing the DOGE administration’s efforts to curb spending.
The short-term interest rate (STIR) market is now pricing in more than three 25-basis-point rate cuts by the Federal Reserve between June and December 2025, as indicated by the widening spreads in Fed Funds and SOFR futures for that period.
This pricing in the STIR market starkly contrasts the buoyant sentiment in the equity market. Analysts note the growing divergence between these two segments, suggesting that the Federal Reserve is unlikely to cut interest rates with equity prices at their current elevated levels. The strong jobs data reinforces the Fed’s current stance of maintaining higher rates for longer to combat potential inflationary pressures.
Source: CME Group
High-volatility markets underscore the importance of finding the optimal position size. Too large, and emotional impulses can override rational analysis. Too small, and potential gains become insignificant. The sweet spot allows for clear-headed decision-making with meaningful impact.
Cardinal Rule: Never enter into a position size too large, or one that gives you risk of emotional distress or impaired judgment should the trade move against you.
It was the first negative GDP since 2022. Real gross domestic product was down 0.3%, a minor contraction but significantly down from the prior quarter’s GDP growth rate of 2.4%.
This GDP report is so important. The report, which shows data only from January to March, particularly shows the negative impact of the tariffs. So, the report doesn’t even reflect the long list of “reciprocal tariffs,” which was announced on April 2 and is currently on pause.
The Bureau of Labor Statistics (BLS) released figures for April that defied widespread expectations and forecasts, reporting the creation of 177,000 new jobs. This robust number surprised many analysts, particularly given the challenging economic backdrop of the month, which included declining consumer confidence, persistent disinflationary data, heightened tensions with China, and a strained European economic outlook.
Despite these headwinds, the BLS data indicates a continued healthy pace of employment.
The headline unemployment rate remained steady at 4.2%.
Source: Bloomberg
West Texas Intermediate (WTI) crude oil prices have retreated below the $59 per barrel mark, marking a significant move that confirms a weakening trend telegraphed by market analysis for nearly a year.
The bearish sentiment in oil has intensified following key developments and signals from major players.
For the past two years, the Organization of the Petroleum Exporting Countries (OPEC) had effectively stabilized prices around the $62 level through transparent production limits and open market interventions.
However, a notable shift in Saudi Arabia’s stance has emerged. A report from Reuters, citing five unidentified sources with knowledge of the matter, indicated a significant change in Saudi Arabia’s immediate strategy. The Kingdom reportedly signaled its unwillingness to further prop up the oil market with additional supply cuts and conveyed its capacity to withstand a prolonged period of low oil prices.
This announcement has been foreshadowed by recent trading activity. WTI crude opened the week on Sunday evening, April 25th, at its weekly high of $63.49, briefly touched $63.92, and then experienced a sharp decline of approximately $6 per barrel over the subsequent three trading sessions. This price action suggests that Saudi Arabia was likely aware of its impending announcement regarding its shift in market support.
Source: TradingView
In the first indication of a potential easing of trade tensions, China has signaled a possible willingness to engage in trade negotiations with the United States following President Trump’s recent imposition of further tariffs. While Beijing emphasized the necessity of “sincerity” from the U.S. side, the market has responded positively, rallying on renewed hopes for a diplomatic resolution.
The apparent shift in China’s stance comes as both nations face increasing economic pressures from the protracted trade dispute. However, despite the expressed openness to dialogue, substantial obstacles to meaningful negotiations persist, suggesting that the trajectory of U.S.-China trade relations will continue to exert a significant influence on trader psychology in the near term.
Gold futures prices experienced a volatile trading week. The front-month gold contract finished the week lower, marking its second consecutive weekly loss with a 1.6% decline to $3,243 a troy ounce.
Technically, the gold chart presents a mixed picture. Despite the recent plunge, some observers noted that the market’s structure paradoxically appears more constructive following the sharp selloff, citing a “layer cake” of support beneath the current price and a remarkably low and declining number of speculative long positions. This suggests that while the immediate chart looks precarious, the lack of excessive bullish bets could limit further downside.
Source: TradingView
Bitcoin saw a strong recovery last week, surpassing $97,000, driven by significant inflows into spot ETFs and optimism around potentially easing U.S. trade policies.
While this momentum is encouraging, sustained gains will depend on broader liquidity improvements, which have not yet materialized. Short-term narratives should be viewed separately from medium-term structural forces.
Bitcoin appears undervalued, while gold is relatively expensive (except compared to overvalued tech stocks). This valuation discrepancy suggests a potential swap, although Bitcoin’s correlation to the expensive tech sector complicates this analysis.
