Market Commentary: Friday 4th April

On Wednesday, we had Liberation Day, and some are referring to Thursday as "Obliteration Day" as global stock markets tumbled. The “US exceptionalism” trade is also being unwound, with investors selling US assets that tend to outperform when America leads the rest of the world. US 10-year yields are hovering around 4%, continuing to move lower alongside the USD.

Selfishly focusing on the impact to the UK, a rate cut in May is now priced in at 90%, with UK inflation expected to cool due to USD weakness. The UK is also expected to benefit from global exporters looking to cut prices and attract trade opportunities as they diversify away from the US.

Oil continues to fall, with Trump’s tariffs and an OPEC decision to increase output faster sending Brent Crude to $70 and WTI below $67. This will be seen as a win for Trump, who has consistently bemoaned high oil prices as a headwind to growth. It also adds further relief to global inflationary pressures—something central banks will welcome.

Later today, we will hear from Powell, which will help set the tone for the Fed’s response to this week and to Non-Farm Payrolls (NFPs). NFPs—normally the main event at the start of the month—could pile on the misery, and even a good number might be shrugged off as irrelevant given the fallout of the week.

Let’s wait and see.

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