Last week, Trump's tariff game triggered a huge shock in the financial market. Trillions of funds experienced a "roller coaster" and Wall Street tycoons rewrote the script overnight. President Trump's erratic response to tariffs triggered a frenzy of selling in U.S. stocks, bonds and the dollar, supporting gold's safe-haven status as concerns about a global recession swept Wall Street. In particular, the sell-off in U.S. government bonds highlighted investors' declining interest in U.S. assets and raised questions about whether the country's debt is still a safe haven.

The drag of trade policy may make a recession more likely. However, the market still believes that there is a higher probability of actual activity contraction later this year. Investors will have three months of trade and tariff policies driving stock market volatility. The hallmark of disguised surrender is the exemption of large companies, leaving individuals to choose winners and losers in the business world. Either way, investors should discount a larger stock risk premium to the market.

At this stage, with tariff levels now almost stopping all trade between China and the United States, the concern now is that the economic struggle between the world's largest economies may spread to other areas of the relationship between the two countries.

Review of last week's market performance:

The U.S. stock market opened lower and ended higher last week, as consumer sentiment plummeted and 10-year Treasury yields rose as Trump's tariff policy changed dramatically, and investors weighed the latest tariff developments and chose risk-averse mode again. U.S. stocks rose on Friday, ending a turbulent week on a high note as potential hopes for a U.S.-China trade deal boosted investor sentiment. Last week, the S&P 500 rose 5.7% to close at 5,363.36; the Nasdaq soared 7.3% to 16,724.46, and the Dow Jones rose nearly 5% to 40,212.71, posting its best weekly performance in more than a year, driven by Wednesday's historic rebound.

Last week, gold continued its rally to hit the $3,245.50 per ounce mark, setting a new record, benefiting from a weaker dollar and a surge in demand for safe assets after the U.S.-China trade war further escalated. The current US-China trade war measures are expected to affect the nearly $700 billion in goods exchanged between the world's largest economies each year, weakening risk assets associated with global growth and supporting flows into safe assets. On the monetary policy front, the Federal Reserve did not indicate that it would use policy intervention to curb the surge in long-term yields, but further evidence of deflation in the March CPI report supported the case for rate cuts this year and also supported precious metal assets. Gold prices surged 6.58% to $3,237.50 for the week.

Silver prices rose to a weekly high of $32.310 an ounce last week, marking the third consecutive day of gains as broad dollar weakness and growing economic concerns boosted demand for alternative assets. The metal also benefited from increased safe-haven flows, supporting silver prices as the dollar lost some of its traditional safe-haven appeal. The full-week gain reached 9.18% to $32.190

The dollar extended its losses after suffering its biggest drop in three years as China imposed tariffs on all US goods, the latest round of confrontation in the trade war that shook the market violently last week. The dollar continued to fall, safe-haven currencies such as the yen and Swiss franc rose, while the euro rose to its highest level in three years. The 10-year U.S. Treasury yield remained above 4.4% after rising 50 basis points this week.

The dollar index fell more than 1% to 99.02 before the end of last week, the lowest level in nearly three years, as investors continued to withdraw from U.S. assets. Escalating trade tensions and concerns about the broader economic impact, especially on the United States, have severely hit market sentiment. In addition, although the 90-day truce announced by President Trump briefly raised hopes for the resumption of trade negotiations, concerns about a recession are growing. So far last week, the dollar index fell 3.04% to close at 99.77, marking its biggest weekly drop since November 2022.

The euro extended its gains and broke through the $1.14 mark for the first time since the end of January 2022. The euro is on track for a 3.87% weekly gain at the end of a week marked by escalating global trade tensions, which has raised concerns about a deep recession and shaken investor confidence in U.S. assets. The yen broke through 143 against the dollar, reaching its highest level since late September 2024 at 142.07, up 2.36% for the week, as escalating trade tensions between Washington and Beijing triggered widespread dollar weakness, boosting demand for safe-haven assets. Meanwhile, a massive sell-off in U.S. Treasuries further supported the yen's gains.
GBP/USD broke through $1.30 last week, reaching as high as $1.3145, approaching its six-month high of $1.3207 on April 3, rising for the fourth consecutive trading day and up 1.55% for the week, with the key driver behind it being a broad-based weakening of the dollar. The dollar index has fallen below 100.00, hitting a new low since July 2023. The Australian dollar remained volatile against the U.S. dollar last week, hitting the psychological barrier of 0.6300 earlier. At this stage, market sentiment is cautious, with both long and short sides evenly matched. Although the U.S. dollar index fell to a three-year low, the Australian dollar failed to effectively take advantage of this favorable factor, showing inherently weak fundamentals. But it still rose sharply by 4.02% for the week.

WTI crude oil spot rose 2.4% to $60.99 per barrel last Friday after U.S. Energy Secretary Chris Wright said the United States may take measures to block Iran's oil exports to put pressure on Tehran's nuclear program. However, concerns about the U.S.-China trade dispute continue to affect demand expectations. The U.S. Energy Information Administration lowered its global oil demand forecast, warning that prolonged trade tensions could curb consumption. At the same time, OPEC+ surprised the market by accelerating its production increase plan, raising concerns about oversupply. Oil prices remain volatile amid both demand and supply risks. Last week, WTI crude oil fell 1.79% for the whole week, after falling 9.79% the previous week, reaching its lowest level since April 2021. Brent crude oil fell more than 3.5% to $63.3 per barrel, after falling 9.9% in the previous cycle, reaching its lowest level since April 2021.

Bitcoin broke out of the W-shaped bottoming pattern last week and rebounded to around $81,330 before the weekend. Before US President Trump suspended reciprocal tariffs for 90 days, he released a buy signal in the community, which aroused the dissatisfaction of the Democratic Party. Senator Warren demanded an investigation into potential insider trading and the possibility of market manipulation. Controversial videos from the White House were exposed, in which Trump praised his subordinates' stock trading performance.

The yield on the 10-year U.S. Treasury bond rose sharply by about 10 basis points to more than 4.5% last Friday, reaching its highest level since mid-February. The yield is expected to rise by more than 50 basis points, marking the most violent weekly sell-off in the U.S. bond market since September 2019. As investors increasingly withdraw from US assets, the sell-off in US Treasuries intensified, indicating that confidence in the traditional safe-haven status of US government bonds may be eroded. The sell-off occurred against the backdrop of escalating trade tensions and growing concerns about the US outlook, with investors worried about a possible recession and high inflation.

Market Outlook This Week:

Global markets are expected to remain highly sensitive; investors will continue to pay attention to the development of the trade outlook

Last week, US President Trump's trade policies shook the financial markets, with the US dollar, US bonds and US stocks falling together in a rare manner, and "selling the US" became a hot topic. Looking ahead to this week, the European Central Bank is expected to cut interest rates, but the Bank of Canada may choose to wait and see this time. The UK, Canada, New Zealand and Japan will release CPI data, while the main data in the United States will be retail sales. China's GDP will also be in the spotlight as Beijing has not been immune to Trump's trade policies. On the other hand, global markets are expected to remain highly sensitive and investors will continue to pay attention to the development of the trade outlook. Uncertainty surrounding the impact of escalating tariffs on the US economy continues to cloud market sentiment and drive volatility across asset classes. On the economic calendar, key data releases will include US retail sales and industrial production data, China's first-quarter GDP growth data, Germany's ZEW economic sentiment index, UK inflation and labor market data, and CPI data from Japan and India.

Latest news: The Trump administration has exempted electronic products such as smartphones and computers from its "reciprocal tariffs", allowing global technology manufacturers such as Apple and Nvidia to temporarily avoid the impact of major tariffs. The US Customs and Border Protection announced the exemptions late on Friday (April 11), excluding these products from Trump's 125% tariff on China and the 10% baseline tariff on almost all other countries, narrowing the scope of the tax. The exemption is seen as a major concession in Trump's conflict with China, but it may be short-lived. The United States is expected to launch a new round of investigations on semiconductor imports soon, and new tariffs may be imposed on them again in the future.

Most Western markets will be closed on Friday for the Easter holiday.

Tariff concerns shake confidence in the market; the dollar's safe-haven status is under pressure

The dollar's role as a global safe-haven asset is facing challenges due to rising budget deficits and trade tensions. As investor confidence is shaken, traditional safe-haven currencies such as the Swiss franc and the Japanese yen are gaining attention, indicating a broader retreat from US assets. Over the past week, the failure of the US Treasury market and the US dollar to perform as safe-haven assets has overturned market conventions and weakened the benefits of US "exceptionalism". The cliff-like decline of the US dollar and the strong rebound of safe-haven currencies. The US dollar index fell to 99.02, a three-year low.

Looking ahead to this week, the US dollar index may make a wave of technical rebounds at the beginning of this week, but the overall trend is still expected to be weak. It is estimated that it will fluctuate in the range of 98.35 (76.4% Fibonacci retracement of 93.27 to 114.78) to 101.49 {61.8% Fibonacci retracement} in the short term. If risk aversion continues, the Swiss franc and the Japanese yen are expected to strengthen further, and the US dollar against the Swiss franc may test 0.81000, and the US dollar against the Japanese yen may fall to 140.00. The euro and pound may trade in the range of 1.1250 to 1.13500 and 1.3000 to 1.3150, while the Australian dollar may fluctuate between 0.6150 and 0.6428. Traders need to pay attention to US economic data and geopolitical dynamics to capture market direction.

Gold price breaks through 3200; where is the market trend?

In the short term, spot gold is expected to continue to remain strong. The US dollar index hit a three-year low, providing strong support for gold prices. The escalation of global trade tensions has intensified market risk aversion and enhanced the attractiveness of gold. US inflation data was lower than expected, reinforcing market expectations that the Federal Reserve may cut interest rates several times this year. The downward cycle of interest rates is usually good for gold because it reduces the opportunity cost of holding gold. If the market's expectations for the Federal Reserve's interest rate cut are further strengthened, gold prices may continue to rise and are expected to challenge the psychological mark of $3,500 this year.

On the other hand, although bulls dominate in the short term, gold prices are already at historical highs, and the potential risk of a correction cannot be ignored. R technical indicators are all at high levels, close to the overbought area, suggesting that there may be a technical correction in the short term. If there are signs of easing trade tensions or hawkish remarks from Fed officials, gold prices may fall.

In the medium and long term, if US inflation data continues to improve, the Fed postpones interest rate cuts, and the US dollar stabilizes and rebounds, it may put pressure on gold prices. In addition, major central banks around the world still hold a large amount of gold reserves, and if there is a large-scale profit-taking, it may also trigger a decline in gold prices. In this case, gold prices may pull back to the $3,100-3,000 support range, or even test the $2,950 level of the lower track of the channel.

However, even if there is a pullback, considering that global economic uncertainty and geopolitical risks still exist, it is unlikely that gold prices will fall sharply. The market pays attention to the Fed's policy trends, inflation data, and the progress of trade negotiations as key indicators for judging the future direction of gold prices.

Iran sanctions and tariff storm; where are the trading opportunities for the two oils?

The core focus of the crude oil market last week was the dual drive of geopolitical risks and tariff rhetoric. Brent crude and WTI crude rose 3.5% and 4.0% respectively, driven by expectations of Iranian export restrictions, a weaker dollar and risk aversion, ending the previous sluggish trend. The downward revision of the EIA demand forecast and the situation between Russia and Ukraine injected mixed emotions into the market, while speculators' long-covering further amplified price fluctuations.

Looking ahead to this week, the trend of oil prices will depend on the implementation of Iranian sanctions and the performance of global demand data. Brent crude oil may operate in the range of $63.00/barrel to $67.00/barrel, while WTI crude oil fluctuates between $60.00/barrel and $64.00/barrel. If geopolitical risks continue to ferment, oil prices may further rise; but if demand data continues to be weak, the market may face correction pressure. The trend of the US dollar and speculative sentiment will still be key variables, and traders need to pay close attention to the latest developments in the EIA inventory report and the international situation.

Conclusion:

The Trump administration's decision to suspend some tariffs is like pressing a brief pause button in a storm, but it has failed to change the course of the Fed's giant ship. At a time when the fog of trade policy and the conflicting signals of economic data are at odds, Fed officials have chosen to stick to the sidelines and anchor interest rates at current levels. Behind this policy deadlock is the rare dilemma of the simultaneous emergence of the specter of inflation and the risk of economic slowdown. Monetary policy makers are facing one of the most complex decision-making environments in decades.

The current policy stagnation may be just the calm before the storm. As companies adjust their inventory cycles and delay investment decisions, the third-quarter economic data may provide a clearer policy roadmap. But the market seems to be unable to wait for official signals - the credit derivatives market is pricing in higher default risks, and the continued flattening of the Treasury yield curve indicates recession concerns. In this policy fog, the Fed must avoid both relaxing its vigilance too early and causing inflation to get out of control, and preventing excessive tightening from causing a hard landing of the economy. This summer, Powell and his colleagues will perform a sophisticated monetary policy tightrope show, and the global economy will be the audience of this show.

Overview of important overseas economic events and matters this week:

Monday (April 14): OPEC releases monthly crude oil market report, US New York Fed 1-year inflation expectations in March

Tuesday (April 15): Richmond Fed President Barkin speaks on "getting through the economic fog", Philadelphia Fed President Harker speaks on the role of the Federal Reserve, Atlanta Fed President Bostic speaks on monetary policy, Reserve Bank of Australia releases minutes of April monetary policy meeting, IEA releases monthly crude oil market report, Eurozone April ZEW economic sentiment index

Wednesday (April 16): Eurozone March CPI annual rate final value, US March retail sales monthly rate, US March industrial output monthly rate, The Bank of Canada announced its interest rate decision and monetary policy report, the US NAHB housing market index for April, and the US EIA crude oil inventory for the week ending April 11.

Thursday (April 17): Cleveland Fed President Hammack participated in a Q&A session, Fed Chairman Powell spoke at the Chicago Economic Club, Kansas Fed President Schmid and Dallas Fed President Logan held a fireside chat on the US economy and banking industry, the European Central Bank announced its interest rate decision, the number of initial jobless claims in the US for the week ending April 12, and European Central Bank President Lagarde held a monetary policy press conference.

Friday (April 18): Japan's core CPI annual rate for March, San Francisco Fed President Daly spoke

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