Bulls in Waiting or Bears in Disguise?
Global equities found their footing this week as investors pivoted into cyclical stocks, keeping the S&P 500 comfortably above 5,600. Meanwhile, gold and copper surged to record highs, fueled by renewed concerns over metal tariffs.
On the policy front, the Federal Reserve held rates steady and slowed down quantitative tightening—a clear signal to support market liquidity. With two rate cuts on the horizon, stocks bounced back. But is this a real rally… or just a temporary lift?
This week’s Weekly Economic and Financial Commentary (WEFC) cuts through the noise, unpacking what’s really driving markets—and what’s just short-term static.
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1. Market Rotation Supports Global Equities; Gold and Copper Hit Record Highs
Global equities stabilized as investors rotated capital from China and Europe into cyclicals and underperforming markets. The S&P 500 held above 5,600, led by industrials and financials. Gold broke above $3,000/oz, and copper hit new highs amid tariff concerns.
2. Corporate Earnings Face Pressure, but EPS Growth Remains Broadly Positive
Earnings revisions have trended lower for 13 weeks, led by U.S. companies—likely due to tariffs. Still, most sectors in the U.S., Europe, and Japan report positive EPS growth, showing solid fundamentals despite a more cautious global profit outlook.
3. Fed Slows QT as Market Bets on More Rate Cuts
The Fed kept rates steady and slowed quantitative tightening, aiming to preserve market liquidity. It forecasts two cuts this year, but markets expect three. Inflation expectations rose, but Powell dismissed consumer survey data as an outlier. Tariffs are seen as a short-term inflation risk.
4. Central Banks Hold Steady, But Global Policy Paths Diverge
The Fed, ECB, BoE, and BoJ held rates unchanged. However, outlooks are diverging: the Fed and BoC lean toward easing, while BoE and ECB are cautious. The BoJ may hike again as wage growth accelerates. Global rate differentials are driving FX and bond market shifts.
5. U.S. Housing Market Remains Resilient Despite High Rates
Housing starts rebounded 11.2% in February. New home inventory is rising, but existing home supply remains tight. Mortgage rates stay elevated, yet loan demand is recovering.
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About Weekly Economic and Financial Commentary (WEFC)
The MacroMicro WEFC cuts through the noise, delivering rigorous analysis and in-depth insights on the most critical market-moving events. These topics cover equities, foreign exchange, bonds, commodities, global central banks, international political economy, and more.
At the core of WEFC is a concise Chart Pack, enabling you to grasp market trends at a glance.
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