Donald is going to be very jealous. The ECB cut interest rates by 25 basis points this morning, lowering its key deposit facility rate to 2.25%, down from a peak of 4% in mid-2023. It was the central bank’s seventh rate cut since June 2024 and came amid escalating global trade tensions, particularly new U.S. tariffs, which threatens to derail the euro zone’s economic recovery. While some U.S. and retaliatory tariffs have been paused or eased, fears of their potential impact on euro zone growth prompted the ECB's action. Investors are closely watching for signals from ECB President Christine Lagarde on the future path of monetary policy, particularly regarding the neutral interest rate (the level that neither stimulates nor restricts the economy). With inflation easing and confidence indicators falling, markets expect two or three more cuts this year, possibly starting again in June. 

The BoC held its policy rate steady at 2.75%, pausing its rate-cutting cycle amid rising uncertainty over U.S. trade policy. Governor Tiff Macklem emphasized the need for more clarity on tariffs before making further moves, noting the central bank’s focus on maintaining price stability and economic confidence. Faced with highly unpredictable trade developments, the bank outlined two economic scenarios: one with modest growth and low inflation if tariffs ease, and another involving a prolonged recession and high inflation if a global trade war unfolds. While the bank refrained from offering detailed forecasts or forward guidance, it signaled caution, stressing that monetary policy cannot fully offset the effects of a trade war. 

Trump would like to say “You’re fired!” Donald Trump sharply criticized Fed Chair Jerome Powell, calling for his removal and accusing him of being consistently too slow in lowering interest rates. In a Truth Social post (don’t worry we’ll save you from reading the whole thing), Trump nicknamed Powell “Too Late” and claimed that his "termination cannot come fast enough," though it remains unclear whether he was referring to the end of Powell’s term or suggesting an earlier date. The remarks have reignited debate over the Fed's independence, especially as the White House's ability to remove officials from independent agencies faces legal scrutiny. Powell, whose term as chair ends in 2026, defended the Fed’s independence and noted that removal can only occur "for cause." This came after Powell emphasized the importance of maintaining price stability to support a strong labour market, warning that recent tariff hikes could lead to a more persistent rise in inflation. He signaled that the Fed is in no rush to change interest rates, preferring to wait for more clarity amid economic uncertainty. Powell acknowledged the potential conflict between the Fed’s dual goals of controlling inflation and supporting employment, especially if inflation remains elevated while the economy weakens. Despite these risks, the labour market remains strong, with low unemployment and solid job gains, and the Fed plans to continue gradually reducing its balance sheet. 

Tariffy-ing sales. U.S. retail sales jumped 1.4% in March, the biggest gain in over two years, driven largely by a rise in car purchases and other goods as consumers rushed to buy ahead of impending tariffs. Broad-based increases across categories like electronics, building materials, and sporting goods suggest widespread front-loading of purchases, especially with Trump’s 25% vehicle tariffs and steep levies on Chinese imports set to take effect by May. While this boosted Q1 momentum, rising inflation expectations, declining consumer sentiment, and growing recession fears are clouding the outlook. 

The World Trade Organization has sharply downgraded its 2025 forecast for global merchandise trade, now expecting a 0.2% decline instead of the 3.0% growth previously projected, citing escalating U.S. tariffs and broader spillover effects. This would mark the steepest drop since the 2020 pandemic slump. Officials at the WTO warned that continued tariff escalation, especially in the intensifying U.S.-China trade war, could further damage global GDP and financial stability. The WTO fears a long-term decoupling of the U.S. and Chinese economies, which could shrink global GDP by 7% if it leads to broader geopolitical fragmentation. Trade in services is also expected to slow significantly due to weakening demand and uncertainty, despite some regions benefiting from diverted Chinese exports and opportunities to fill gaps left by reduced U.S.-China trade. 

Just weeks after reports surfaced about food service companies like DoorDash offering financing options for takeout, new reports show that the majority of Coachella’s $599 general admission tickets were financed. Facing rising costs, over 60% of Coachella 2025 attendees turned to installment plans to afford tickets. For a $49.99 down payment plus a $41 fee, fans could split the cost across several months, making attendance more financially feasible amid soaring travel, accommodation, and other expenses. Festival organizers have shifted their marketing to highlight low upfront payments rather than artist lineups or lifestyle, a strategy now common across major festivals. With ticket prices soaring and buy-now, pay-later services normalizing debt for non-essential experiences, the trend signals potential recessionary pressures and a cultural economy increasingly dependent on credit. 


Diversion: This bunny has a particular set of skills 

Gold is hitting record highs once again as warnings from Federal Reserve Chief Powell about the impact of the trade war fueled volatility, leading to sharp declines in stocks and the U.S. dollar. Gold added 3.5% yesterday in its biggest one-day gain since March 2023, as the U.S. dollar fell to a fresh six-month low. Gold has been on a tear and has climbed almost 28% this year, already outpacing the 27% gain it notched in 2024, as the escalating trade war creates anxiety over a possible global recession.   

Speaking of buying U.S. Treasuries, data is showing foreign holdings of U.S. Treasuries surged in February by the most since June 2021, with Canada and Japan among the biggest net buyers during a month that preceded the bond market’s recent turmoil. Total overseas holdings of Treasury securities jumped by $290 billion to a record $8.82 trillion in February, Treasury Department figures showed Wednesday. Foreign buyers purchased a net $106.2 billion of long-term, and $73.2 billion of short-term, Treasuries in the month. Canada, which had net sales of Treasuries in January, more than made up for those in February, with net purchases of $46.5 billion in long-term Treasuries.