ASIA MARKETS

Asian markets are gearing up for a choppy open on Monday as traders brace for a double whammy of China’s deepening deflationary pressures and Federal Reserve Chair Jerome Powell’s measured but uncertain take on the U.S. economy.

Monday kicks off with the same old deflationary drumbeat as China’s consumer inflation took a deeper dive than expected, slipping below zero for the first time in over a year. The data only reinforces what’s been clear for months—deflationary pressures remain firmly entrenched in the world’s second-largest economy.

PPI fell for the 29th straight month, down 2.2% in February, and while that’s a marginal improvement from January’s 2.3% drop, it doesn’t change the bigger picture. The property sector remains stuck in the mud, domestic demand is weak, and despite a bounce in tech stocks, the broader wealth effect just isn’t filtering through to consumers. Chinese retail investors might be riding the market rally, but the fact that household spending remains subdued suggests most are either tapped out or too cautious to dive into equities. A stock market pop doesn’t fix a sluggish economy overnight.

Now, all eyes turn to whether Beijing’s stimulus efforts will finally show up in stronger domestic demand or if this latest round of economic support is just another drop in an already leaky bucket. Until then, investors are left sifting through the noise, trying to determine if China’s economic engine has any real momentum or if it’s still stuck in neutral.

MARKETS

That was one for the books—a week where markets whipsawed between panic and less panicked, leaving traders dazed and scrambling to make sense of the shifting macro landscape.

Starting with the U.S., the latest payroll report landed in that frustrating no-man’s land—not disastrous, but not reassuring either. Job growth held steady, but the unemployment rate ticked up to 4.1%, more Americans found themselves stuck in part-time gigs, and the number of people juggling multiple jobs hit a record 8.9 million. Not exactly a picture of economic strength. Still, it wasn’t the doom-and-gloom scenario some had priced in, and that was enough to give equities a lift. The S&P 500 tacked on 0.6%, the Nasdaq climbed 0.7%, and the Dow squeezed out a 222-point gain.

But it wasn’t just stocks reacting. Treasury yields snapped a three-week losing streak, with two-year yields rising to 4.00% as traders started second-guessing how aggressive the Fed will be on rate cuts. The dollar, which had been bruised all week, found some footing. Yet the broader picture remains murky—trade war fears are flashing recession warnings, real-time GDP trackers are showing deep Q1 contraction, and record trade deficits (thanks to companies stockpiling imports ahead of tariff hikes) are distorting the numbers.

Even after Friday’s late-session bounce, the S&P 500 still logged its worst week since September, shedding nearly 7% from its all-time high in February and wiping out every post-election gain. Big Tech took the biggest beating, with the Nasdaq 100 flirting dangerously close to correction territory—something that wasn’t on the radar just a few weeks ago.

Trump, unfazed as ever, brushed off concerns about a looming slowdown, calling it a "transition phase" on Fox News’ Sunday Morning Futures. But let’s be real—between the relentless job cuts from the administration’s bureaucratic purge and the tariff uncertainty that has businesses second-guessing hiring plans, the labor market is facing some turbulence. With companies holding off on expansion until they get clarity on trade policy and the broader economic outlook, we could see hiring stall in the months ahead.

Market whiplash has been the name of the game, and the Cboe Volatility Index (VIX) backed that up, spiking above 26 intraday last week—a level that’s been a rarity outside the pandemic-era chaos of 2020-2022. If there’s one thing traders can count on right now, it’s that volatility is here to stay.

Meanwhile, across the Atlantic, Germany threw out its fiscal playbook and dropped a historic spending bombshell—up to 20% of GDP in support. That sent German stocks soaring, bond yields spiking, and eurozone growth forecasts moving north. The divergence between Wall Street and Europe widened throughout the week before cooling off on Friday, but this transatlantic economic gap isn’t going away anytime soon.

And let’s not forget China’s latest five-year plan—5% growth, fueled by government spending that will push the budget deficit to a record 4% of GDP. Fiscal policy is doing the heavy lifting everywhere except in the U.S., where uncertainty around tariffs and trade policy continues to dominate the conversation.

It was a chaotic week—German fiscal fireworks, U.S. recession rumblings, Wall Street’s rollercoaster ride, and a fresh round of geopolitical uncertainty. Strap in, I suspect this week won’t be much quieter.

FOREX MARKETS

Trade war fears are ringing recession alarm bells across global markets, and for good reason. The uncertainty surrounding tariffs and retaliatory measures is rippling supply chains, squeezing corporate margins, and making businesses think twice before expanding or hiring. Hence, the best recession defence in the global economic tumult could be the long yen trade as Japanese funds and the retail army repatriate funds against an increasingly grimmer global outlook.

COMMODITIES

Over in commodities, crude oil is on the ropes, posting its seventh straight weekly decline as supply concerns overshadow demand optimism. Meanwhile, gold shined as a safe-haven play, climbing for the week as traders sought refuge from the market storm. When uncertainty reigns, gold tends to have the last laugh.

More By This Author:

Flipping The Transatlantic Script As Tariff Turmoil Hits The U.S.
NFP Setup – Euro Bulls Hold Firm, And Rightfully So
Trump Throws A Bone With Temporary Tariff Exemptions, But Traders Aren’t Biting