Allegra Stratton: Seeing Through The Fog Of Trade War

Economic

Summary:

The tug of the trade war continues today.

The UK government is still in its dual negotiations with both the US and EU – two separate teams pulling away in parallel, with briefing every day to suggest both are about to get something over the line. There’s also plenty of briefing that these teams are in fact working against each other, and that a EU deal will scupper the US one.

The case for the UK cosying up to Europe is bolstered by a story out today showing Europe is doing pretty well considering we’re a fortnight into Trump’s tariff era. Germany’s big bazooka of military spending, announced just before Trump’s tariffs, had also boosted the mood. Europe’s financial markets look more resilient than America’s at the minute, the euro the strongest it’s been in three years, and German bonds last week beat US Treasuries “by the most ever,” according to our team.

They go on: “Europe’s long-sluggish financial markets are being shocked into life as Donald Trump’s drive to reshape global trade and security undermines America’s decades-long dominance. Across assets of all stripes, the Old Continent is collectively trouncing America in a way that’s rarely been seen before.”

Remember this is in the context of Europe being the butt of all political and economic jokes a few months back (this year’s Davos was dominated by a sense that the US was boom town and Europe doom town). The view then was that Europe was being humiliated by America’s tech stocks, was struggling without cheap energy — and with an ageing population and creaking public finances, managed decline was the best the continent could hope for.

Well it all feels different now. I loved this quote: “There’s this feeling that Europe is just a museum; well, the museum is now coming to life,” said by Catherine Braganza, who’s been buying European high-yield bonds for the funds she manages at Insight Investment in London.

So it’s no surprise that Keir Starmer and Rachel Reeves are so keen to announce a security and defense pact as part of the refreshing of the post-Brexit trade deal. Our Ellen Milligan is always revealing details of the direction of travel here. The trouble is, the Brexiteer OGs – David Frost and Nigel Farage – are warning that if the prime minister signs the UK up to EU food and veterinary standards, it shuts the door on American products coming into the UK in any trade deal.

So that’s the politics, but how long will Europe’s new found economic bounce last? How much is this European renaissance a function of the world being seven days into the 90-day trade truce that Donald Trump stunned the world with precisely a week ago? What if, once those 90 days end, Europe reverts to receiving 20% tariffs from the US? As with so much we are processing right now, much of the data we are dealing with is out of date.

Even inflation today, coming in below expected at 2.6% in the 12 months to March, is from another era. It doesn’t yet price in the bumper bill increases that have come our way this month which suggest inflation will shortly go back up again.

Yet not all are convinced this will happen, with an argument that inflation could go down further with tariffs if Europe and Asian markets send cheaper goods our way and provide the bank with “more room to cut rates.” As with almost everything right now — we are in the fog of a trade war.

Source: Bloomberg Europe

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Damon

Cryptocurrency

Reactions among market analysts and participants remain divided. Michael Wilson from Morgan Stanley suggests both crypto and stock markets may maintain a sideways trend. Markus Thielen, Founder of 10X Research, shared that "while easing measures and relaxed tariff discussions could support Bitcoin's recovery, immediate catalysts for a dramatic surge appear limited."

Bitcoin has recently exhibited renewed momentum, with its price circulating around $85,000 as observed on April 17, 2025, supported by emerging optimism among traders. This shift in sentiment highlights the market's anticipation for upcoming tariff policy announcements and global economic developments.

Bitcoin Nears $85,000 Amid Policy Anticipation

Crypto analytics firm Santiment reports a positive shift in the cryptocurrency market, as Bitcoin's price experiences a late rally. This increase marks a recovery from a recent low of $74,500. As the value reaches $85,000, traders' attitudes shift towards optimism.

Key changes include a noticeable increase in traders' confidence, with Bitcoin now showing signs of reclaiming the $90,000 threshold. Market indicators such as the Network Realized Profit/Loss suggest sustained future rallies, aligning with rising wallet balances and decreasing exchange supplies.

Analysts See Regulation, Economic Shifts Driving Stability

Did you know? Historically, periods of deep bearish sentiment in crypto markets have often led to strong upward price movements. This pattern appears recurrent in current circumstances, reflecting a consistent reaction mechanism.

CoinMarketCap reports Bitcoin's current standing with a price of $84,902.44, rebounding with a 9.72% gain over the week. The market cap is $1.69 trillion, dominating 63.16% of the market. Supply circulation continues toward its 21 million cap, maintaining significant interest.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 16:08 UTC on April 16, 2025. Source: CoinMarketCap

Analysts from Coincu highlight potential economic impacts from evolving global policies. They foresee potential market interventions as regulators consider digital currency strategies. While the market adjusts to these shifts, Bitcoin is likely to stay relatively stable, contingent on upcoming global economic policies and technological advancements.

Source: CryptoSlate

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Warren Takunda

Cryptocurrency

Bitcoin faces an uphill struggle as a safe haven in 2025 as gold fund inflows circle $80 billion.

Data from Bank of America (BoA) uploaded to X by trading resource The Kobeissi Letter on April 15 confirms gold’s “best streak” since 2013.

Gold beats records as Bitcoin ETFs slump

As the US trade war sees investors flee to gold, Bitcoin has lost the limelight as a hedge against macroeconomic volatility.

BoA figures show inflows to gold funds beating records, with data from Cointelegraph Markets Pro and TradingView capturing new all-time highs for XAU/USD near $3,300 per ounce on April 16.

“Gold fund net inflows have hit a record $80 BILLION year-to-date. This is 2 TIMES more than the previous high set in the full year 2020,” Kobeissi noted.

“Investors are pouring money into gold at a record pace as the market uncertainty has skyrocketed. As a result, gold prices have rallied 22% year-to-date and have outperformed every other major asset class.” Bitcoin Trader Sees Gold 'Blow-Off Top' as XAU Nears New $3.3K Record_1

Bitcoin Trader Sees Gold 'Blow-Off Top' as XAU Nears New $3.3K Record_1

Gold fund flows chart. Source: The Kobeissi Letter/X

BTC price action, by contrast, paints a very different picture. Despite the appearance of the US spot Bitcoin exchange-traded funds (ETFs) and growing global integration, BTC/USD reached five-month lows earlier in April.

Data from onchain analytics platform Glassnode calculates that the ETFs’ combined assets under management fell from $106 billion at the start of the year to $92 billion this week.

“Gold prices have also hit 52 all-time highs over the last year, posting the best streak in 12 years,” Kobeissi concluded.

“Gold is the global safe haven.” Bitcoin Trader Sees Gold 'Blow-Off Top' as XAU Nears New $3.3K Record_2

US spot Bitcoin ETF balances. Source: Glassnode

Gold “terminal top” meets Bitcoin bulls

Despite its repeated new records, market commentators already see gold’s unprecedented upside coming to an end.

Addressing the topic on X this week, veteran trader Peter Brandt called a “blow-off top” on XAU/USD.

“Gold has now entered its blow-off stage,” he summarized.

“Such rapid advancement will come to a terminal top, but attempting to pick a high can be very expensive. Blow off tops can extend well beyond a bear's ability to meet margin calls.” Bitcoin Trader Sees Gold 'Blow-Off Top' as XAU Nears New $3.3K Record_3

Bitcoin Trader Sees Gold 'Blow-Off Top' as XAU Nears New $3.3K Record_3

XAU/USD 1-day chart. Source: Peter Brandt/X

A gold comedown may well leave room for Bitcoin to catch up, per a popular theory that says that BTC/USD copies gold trends with a delay of several months.

“Nobody really knows why that happens,” Professional Capital Management founder and CEO Anthony Pompliano told CNBC on April 15.

Pompliano suggested that traditional financial entities were either unauthorized or simply “not used” to the idea of Bitcoin as protection against macro uncertainty.

“What we do see though is that when gold runs, about 100 days later or so, Bitcoin not only catches up; it usually runs much harder, and so you get that higher volatility,” he said.

Source: Cointelegraph

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Michelle

Forex

Economic

The Bank of Canada released the following statement on Wednesday:

"The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

"The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations. Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally. Instead, the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy. In the first scenario, uncertainty is high but tariffs are limited in scope. Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year. Many other trade policy scenarios are possible. There is also an unusual degree of uncertainty about the economic

outcomes within any scenario, since the magnitude and speed of the shift in US trade policy are unprecedented.

"Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the United States,

the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the euro area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.

"Financial markets have been roiled by serial tariff announcements, postponements and continued threats of escalation. This extreme market volatility is adding to uncertainty. Oil prices have declined substantially since January, mainly reflecting weaker prospects for global growth.

Canada’s exchange rate has recently appreciated as a result of broad US dollar weakness.

"In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.

"Inflation was 2.3% in March, lower than in February but still higher than 1.8% at the time of the January MPR. The higher inflation in the last couple of months reflects some rebound in goods price inflation and the end of the temporary suspension of the GST/HST. Starting in April, CPI inflation will be pulled down for one year by the removal of the consumer carbon tax. Lower global oil prices will also dampen inflation in the near term. However, we expect tariffs and supply chain disruptions to push up some prices. How much upward pressure this puts on inflation will depend on the evolution of tariffs and how quickly businesses pass on higher costs to consumers. Short-term inflation expectations have moved up, as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer term inflation expectations are little changed.

"Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher

costs. Our focus will be on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. This means we will support economic growth while

ensuring that inflation remains well controlled.

"Governing Council will proceed carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer

prices; and how inflation expectations evolve.

"Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians."

Source: Yahoo Finance

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FastBull Events

A Gathering of Giants, a Clash of Minds – FastBull Finance Summit Dubai 2025 Kicks Off with a Bang!_1

April 16, 2025, Dubai – The highly anticipated FastBull Finance Summit Dubai 2025 grandly opened at the Coca-Cola Arena in Dubai. The atmosphere was electric as financial elites from around the globe gathered to witness the commencement of this prestigious financial event.

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The first day of the summit was rich in content and full of practical insights, laying a solid foundation for the exciting agenda to come.

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Glendon

Forex

Economic

U.S. retail sales surged in March as households boosted purchases of motor vehicles ahead of tariffs, though concerns about the economic outlook are hurting discretionary spending.

Retail sales increased 1.4% last month after an unrevised 0.2% rise in February, the Commerce Department's Census Bureau said on Wednesday. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, accelerating 1.3%.

President Donald Trump's 25% global car and truck tariffs came into effect in early April, with industry analysts and manufacturers warning that the duties would significantly raise motor vehicle prices.

Motor vehicle manufacturers reported a big jump in auto sales in March, attributed by some to a rush by buyers "to try and beat the tariffs."

Consumers are also stocking up on other imported goods. Bank credit and debit card data suggest spending continues to be driven by high-income households with low-income consumers struggling. There is less discretionary spending, which is mostly on services, the main engine of the economy.

With the stock market selling off as the import duties stoke fears of inflation and stagnation in economic growth or even a recession, there are concerns high-income households could start retrenching if the values of their investment portfolios continue to shrink.

Consumer sentiment is near three-year lows, with 12-month inflation expectations the highest since 1981. Mass layoffs of public workers as part of an unprecedented campaign by the Trump administration to downsize the federal government are also weighing on morale and could be a potential drag on spending.

"Bank of America card data indicates that 'nice-to-have' discretionary services spending eased in March, while more inflation-driven spending on necessities such as insurance, rent and utilities continues to rise," Bank of America Institute said in a note.

Retail sales excluding automobiles, gasoline, building materials and food services rose 0.4% in March after an upwardly revised 1.3% advance in February. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Economists had forecast core retail sales rising 0.6% after a previously reported 1.0% jump in February.

Despite the strength in core retail sales in the last two months, economists expect consumer spending slowed considerably in the first quarter because of sluggish outlays on services.

Consumer spending, which accounts for more than two-thirds of the economy, grew at a 4.0% annualized rate in the October-December quarter.

Economic growth estimates for the first quarter are mostly below a 0.5% rate. The Atlanta Federal Reserve is currently forecasting GDP contracting at a 0.3% pace after adjusting for imports and exports of gold. The economy grew at a 2.4% pace in the fourth quarter.

Source: Yahoo Finance

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Warren Takunda

Economic

British inflation slowed to its weakest in three months in March and other measures watched by the Bank of England cooled too, but higher bills and employer costs will pressure prices soon against the backdrop of U.S. President Donald Trump's trade war.

Inflation slowed to an annual rate of 2.6% in March from 2.8% in February, below expectations of 2.7% in a BoE forecast and a Reuters poll of economists.

A price drop for computer games and falling fuel prices helped bring down the headline rate although the prices of clothes rose strongly after a surprise fall in February, the Office for National Statistics said.

"This is very much the calm before the storm," former BoE interest rate-setter Michael Saunders said, pointing to April's increases in gas, electricity and water prices, alongside higher taxes on employers, which could push inflation to 3%.

"And we'll start to see the effects on the economy of Storm Donald with the Trump trade wars," Saunders told BBC radio.

He said inflation was now likely to peak below the BoE's most recent forecast of 3.7% in the third quarter this year, but the cost would be a hit to economic growth.

The BoE - which has an inflation target of 2% - said in February it expected inflation to leap to 3.6% in April as regulated tariffs for household utility bills go up.

Since those forecasts were made, Trump's decision to impose sweeping trade tariffs have raised the prospect of a slowdown in the global economy.

Martin Sartorius, principal economist at the Confederation of British Industry, said the higher US tariffs could put both upward and downward pressures on inflation in the UK, but the BoE was likely to cut interest rates next month.

The line chart shows inflation, core inflation and services inflation in Britain from January 2023 to March 2025.

Financial markets put a roughly 86% chance on the BoE cutting its benchmark Bank Rate by a quarter of a percentage point at its next monetary policy announcement on May 8, up from about 80% from before the inflation data.

"Looking ahead, we expect them to continue their 'gradual and careful' approach to reducing borrowing costs amid an uncertain economic environment," Sartorius said.

BoE Deputy Governors Clare Lombardelli and Sarah Breeden and Monetary Policy Committee member Megan Greene have all said it is too early to judge the inflation implications resulting from Trump's moves.

Trade experts have said China is likely to send cheaper exports to Europe after being effectively barred from the U.S. market due to high tariffs on the Asian powerhouse.

Sterling fell by about a fifth of a cent against the US dollar after the figures were published.

Inflation in the euro zone also fell in March to 2.2% and to 2.4% in the U.S.

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Wednesday's data showed inflation for UK services - something the BoE considers to be a good guide of price pressures in the economy - slowed to 4.7% from 5.0% in February. The Reuters poll had pointed to a 4.8% increase.

Core headline inflation, which excludes energy, food and tobacco prices, also eased a touch.

However, despite a slowdown in price growth from levels above 11% in 2022, inflation in Britain continues to be a concern for consumers.

Inflation expectations among the public and business have risen, adding to unease among BoE policymakers who are keeping a close eye on other gauges of price pressures in the economy as they assess when to reduce borrowing costs.