Global markets rebound as trade war fears ease, treasury yields under
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Global equity markets moved higher on Thursday, driven by a relief rally in European stocks and U.S. futures, as investors assessed the latest developments in trade tensions and corporate earnings. Meanwhile, Treasury yields remained under pressure, reflecting ongoing uncertainty about the U.S. rate outlook.
European markets extended their gains, supported by a surge in healthcare stocks, following Novo Nordisk’s strong earnings report, which showed Wegovy sales more than doubling in Q4. Futures on EUROSTOXX 50 gained 0.5%, while FTSE 100 and DAX futures added 0.8% and 0.56%, respectively.
On Wall Street, sentiment improved after corporate earnings took center stage. However, Amazon’s Q4 results will be a major test for tech stocks, particularly given recent concerns over AI-related spending by Microsoft and Alphabet.
U.S.-China Trade Tensions and the Yuan’s Stability
Markets found some relief as China opted for a measured response to Trump’s 10% tariffs, imposing retaliatory levies on $14 billion worth of U.S. goods. At the same time, Beijing sought the World Trade Organization’s intervention and reaffirmed its commitment to defending against trade protectionism. Importantly, the People’s Bank of China maintained a firm yuan fix, easing fears of a competitive devaluation. The onshore yuan traded at 7.2845 per dollar, while offshore yuan held at 7.2862, a move seen as an effort to prevent excessive market volatility. In Asia, China’s CSI 300 index jumped over 1%, fueled by optimism in domestic AI firms after the DeepSeek breakthrough. The Shanghai Composite added 1.16%, while Japan’s Nikkei gained 0.6%, lifted by a stronger yen.
Treasury Yields Under Pressure Amid Fed Uncertainty
U.S. Treasury yields hovered near their lowest levels in over a month, as traders remained cautious on the Fed’s next moves. Treasury Secretary Scott Bessent reiterated that President Trump wants lower interest rates, but stressed there would be no direct intervention in the Federal Reserve’s decision-making. His focus on the 10-year Treasury led some analysts to believe that Trump’s administration may be taking a more restrained approach toward monetary policy. Meanwhile, Fed Vice Chair Philip Jefferson signaled that policymakers are in no rush to adjust rates, waiting to assess the full impact of tariffs, deregulation, and tax policies. The 10-year Treasury yield stabilized at 4.43%, while the 2-year yield edged slightly higher to 4.20%. Futures pricing now suggests only 45 basis points of rate cuts by year-end, a downward revision from earlier projections.
Dollar on the Back Foot, Yen Strengthens
The U.S. dollar retreated, tracking the move in Treasury yields. The euro rose to $1.0390, while sterling traded near a one-month high at $1.2480, ahead of the Bank of England’s expected rate cut. The yen held firm at 152.59 per dollar, benefiting from comments by BOJ board member Naoki Tamura, who suggested short-term interest rates could rise to 1% in 2025 to contain inflation risks.
Commodities: Oil Rebounds, Gold Retreats from Record High
Crude oil prices rebounded, stabilizing after the previous session’s sell-off. Saudi Aramco’s sharp price hikes for March crude provided support, with WTI rising 0.42% to $71.33 per barrel, while Brent crude gained 0.31% to $74.84 per barrel. Meanwhile, gold eased slightly from its record peak, last trading at $2,860 per ounce, after rallying earlier in the week amid safe-haven demand fueled by trade war fears.
Outlook: Key Earnings and Economic Data Ahead
With earnings season in full swing, all eyes are on Amazon’s results, which will be a key test for tech stocks. The Bank of England’s policy decision could further shape rate expectations, while the upcoming U.S. jobs report on Friday remains a pivotal event for the broader market outlook.
U.S.-China Trade Tensions and the Yuan’s Stability
Markets found some relief as China opted for a measured response to Trump’s 10% tariffs, imposing retaliatory levies on $14 billion worth of U.S. goods. At the same time, Beijing sought the World Trade Organization’s intervention and reaffirmed its commitment to defending against trade protectionism. Importantly, the People’s Bank of China maintained a firm yuan fix, easing fears of a competitive devaluation. The onshore yuan traded at 7.2845 per dollar, while offshore yuan held at 7.2862, a move seen as an effort to prevent excessive market volatility. In Asia, China’s CSI 300 index jumped over 1%, fueled by optimism in domestic AI firms after the DeepSeek breakthrough. The Shanghai Composite added 1.16%, while Japan’s Nikkei gained 0.6%, lifted by a stronger yen.
Treasury Yields Under Pressure Amid Fed Uncertainty
U.S. Treasury yields hovered near their lowest levels in over a month, as traders remained cautious on the Fed’s next moves. Treasury Secretary Scott Bessent reiterated that President Trump wants lower interest rates, but stressed there would be no direct intervention in the Federal Reserve’s decision-making. His focus on the 10-year Treasury led some analysts to believe that Trump’s administration may be taking a more restrained approach toward monetary policy. Meanwhile, Fed Vice Chair Philip Jefferson signaled that policymakers are in no rush to adjust rates, waiting to assess the full impact of tariffs, deregulation, and tax policies. The 10-year Treasury yield stabilized at 4.43%, while the 2-year yield edged slightly higher to 4.20%. Futures pricing now suggests only 45 basis points of rate cuts by year-end, a downward revision from earlier projections.
Dollar on the Back Foot, Yen Strengthens
The U.S. dollar retreated, tracking the move in Treasury yields. The euro rose to $1.0390, while sterling traded near a one-month high at $1.2480, ahead of the Bank of England’s expected rate cut. The yen held firm at 152.59 per dollar, benefiting from comments by BOJ board member Naoki Tamura, who suggested short-term interest rates could rise to 1% in 2025 to contain inflation risks.
Commodities: Oil Rebounds, Gold Retreats from Record High
Crude oil prices rebounded, stabilizing after the previous session’s sell-off. Saudi Aramco’s sharp price hikes for March crude provided support, with WTI rising 0.42% to $71.33 per barrel, while Brent crude gained 0.31% to $74.84 per barrel. Meanwhile, gold eased slightly from its record peak, last trading at $2,860 per ounce, after rallying earlier in the week amid safe-haven demand fueled by trade war fears.
Outlook: Key Earnings and Economic Data Ahead
With earnings season in full swing, all eyes are on Amazon’s results, which will be a key test for tech stocks. The Bank of England’s policy decision could further shape rate expectations, while the upcoming U.S. jobs report on Friday remains a pivotal event for the broader market outlook.