Markets are generally trending lower, continuing a losing streak as investors respond to strong U.S. growth figures, trade tariff actions, and anticipation of key inflation readings. Global equities are under pressure after the U.S. announced sweeping new tariffs, including a 100% import tax on branded drugs and high levies on furniture, kitchen goods and heavy trucks. Yesterday’s hotter-than-expected economic data may curb the Federal Reserve’s willingness to cut interest rates further. strong GDP growth data (revised up to 3.8%) and strong durable goods orders fuelled concerns about overheating and delayed rate cuts.
A strong economy is a double-edged sword: good for growth but potentially bad for the “easy money” narrative that’s been supporting equities. Trump’s tariffs together with demand for AI will boost the economy, the Fed won’t have a reason to cut interest rates and markets will sell off. As expected bond yields are rallying on strong economic data, the rally in yields and the decline in crypto was a warning to the stock market.
Keep an eye on Bitcoin, and crypto in general, when Bitcoin goes down and the stock market has completed an Elliott wave after a long rally, it is a warning the stock market will turn down. The FTSE 100 is leading the way, the reason it has not dropped significantly lower is because the S&P 500 is resilient. Once the S&P 500 turns down the FTSE 100 will collapse. Today’s US PCE price index at 1.30pm could rally markets if the numbers are lower than expected. Softer inflation could reinforce rate-cut bets and lift stocks but hotter inflation would push yields higher and stocks lower.