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After a shaky start, riskier assets are showing signs of stability. U.S. Treasury Secretary Scott Bessent’s comments about equity corrections being “healthy” have provided some reassurance. However, upcoming U.S. economic data, particularly retail sales figures, and the impending trade reforms on April 2nd will test market resilience.
The potential slowdown of the U.S. consumer is a significant concern, overshadowing tariff uncertainties. February’s retail sales data is crucial, with expectations of a 0.6% rebound after a previous decline. A disappointing result could trigger equity declines, lower interest rates, and a weaker dollar.
Investor focus remains on Washington’s policy agenda. Equities are sensitive to any indication that the administration is willing to accept economic slowdown to implement trade and security reforms. Anticipated tariffs on Europe and Asia suggest continued vulnerability for risk assets in the coming weeks.
This week’s FOMC meeting and Fed forecasts are unlikely to bring major changes, but the Fed’s adherence to two rate cuts this year could provide slight dollar support. Geopolitical developments, including a call between Presidents Trump and Putin, could benefit European currencies. A busy week for central bankers globally, with Switzerland expected to be the only G10 nation to cut rates.
