As expected, BoE cut rates by 25bps! (5-4 vote).
It came as Donald Trump hinted a UK-US trade pact was imminent. Some MIXED SIGNALS - Two members (Swati Dhingra and Alan Taylor) preferred to reduce Bank Rate by 0.5 percentage points, to 4%. Two members (Catherine L Mann and Huw Pill) preferred to leave Bank Rate unchanged, at 4.5%.
Fed leaves rates unchanged, as expected
“The committee … judges that the risks of higher unemployment and higher inflation have risen.” Powell is facing the worst outcome for a Fed President... The Federal Reserve's dual mandate is to promote two main economic goals: maximum employment and price stability... and uncertainty is on both sides How will President Trump react to this? ECB is cutting rates. PBOC as well as they see a disinflationary shock coming. Meanwhile, the Fed stays put. He is not going to like this...
Breaking
PBOC: TO LOWER RRR BY 50 BPS TO CUT POLICY RATE BY 10 BPS TO CUT STRUCTURAL MONETARY POLICY RATE BY 25 BPS TO CUT PERSONAL PROVIDENT FUND LOAN RATE BY 25 BPS. TO INCREASE THE CAPITAL MARKET SUPPORT TOOLS QUOTA TO 800B YUAN.
US power demand
@zerohedge
Saudiarabia posted a $16 bn budget deficit in the first 3 months of 2025
That's already well over half of the $27 bn the government had budgeted for the entire year. Oil averaged $75 in the first quarter of 2025 -- it's now near $60 Source: Ziad Daoud @ZiadMDaoud, Bloomberg
JUST IN: US JOB DATA RELEASED!
Nonfarm Payrolls, 177K Vs. 138K Est. (prev. 228K) Unemployment Rate, 4.2% Vs. 4.2% Est. (prev. 4.2%) Hourly Earnings, 3.8% Vs. 3.9% Est. (prev. 3.8%) ▶️ The US labor market has remained resilient in April. No visible impact of the tariff announcement on employment dynamics (yet?) ▶️ The US economy added 177k new jobs in April (138k expected) after 185k in March. ▶️ February and March data were revised lower (-58k overall) but remain on a decent trend, consistent with a stable unemployment rate. ▶️ As a result, the unemployment rate remains stable at 4.2% (as expected). ▶️ Wage growth slowed down slightly, to +0.2% from +0.3% (+0.3% expected). Hourly earnings are up +3.8% YoY, stable compared to the previous month. Source: Bloomberg
China's exports decline 10% year-over-year, the largest drop in AT LEAST 15 years
China said it is evaluating the possibility of starting trade negotiations with the U.S. Senior U.S. officials have reached out recently “through relevant parties multiple times,” hoping to start tariff negotiations, China’s commerce ministry said. Source: Barchart
As we head into May, a big question for markets is of course whether the US is on a path to a recession or not.
On the positive side, we have not seen a meaningfully consistent erosion of activity yet. Hard data have been doing ok, earnings are resilient, spreads are tightening again, etc. On the negative side, US has not spiked its tariffs this high since the 1940s. It is thus not an easy question to answer. And as shown by the table below by Goldman, market's ability to predict a recession is not that good... It is actually a toss coin Source: zerohedge
