Global Highlights This Week: Trump's Tariffs Rattle Global Markets, Powell to Face Grilling on Capitol Hill

 

Amid the impact of DeepSeek and the threat of Trump's tariffs, the three major U.S. stock indexes declined last week, putting an end to a volatile week.

 

Next, the global markets will continue to face tempests.

 

First, what makes investors nervous is that during his meeting with Japanese Prime Minister Ishiba Shigeru last Friday, U.S. President Trump stated that the United States will announce reciprocal tariffs on some countries this week.

 

Trump pointed out, "I may hold a meeting on this either Monday or Tuesday this week to announce a decision. There may be a press conference. If they charge us, we'll charge them."

 

Analysts warn that tariffs may push up inflation, further delaying the long-awaited interest rate cut by the Federal Reserve.

 

A survey of more than 4,000 traders released this week shows that inflation and tariffs are expected to be the two most influential factors on the market this year.

 

The U.S. CPI report, scheduled to be released this Wednesday, will provide the latest data on the inflation trend and may have a significant impact on the market. If inflation accelerates again, it is highly likely to trigger a new round of selling.

 

Charlie Ripley, a senior investment strategist at Allianz Investment Management, said, "Inflation may have a complex impact on the 2025 interest rate policy and financial markets.

 

If the inflation rate rises again, the chances of the Federal Reserve continuing to cut interest rates will decrease, and obviously, the market doesn't like this."

 

Several Wall Street analysts warn that due to seasonal factors, January is usually a more challenging period for predicting CPI, which increases the possibility of market volatility after the data release.

 

Data from LSEG shows that the market expects the probability of the Federal Reserve keeping interest rates unchanged at its next meeting in March to be over 80%, and it is expected that there will be about two interest rate cuts by the end of this year.

 

However, some investors are lowering their expectations for further easing policies this year. Economists at Morgan Stanley said that they now expect the Federal Reserve to cut interest rates only once in June this year, instead of twice as previously expected, because the uncertainty of tariffs has raised the threshold for interest rate cuts.

 

Lawrence Gillum, the chief fixed-income strategist at LPL Financial, commented, "In the early days of Trump's second-term administration, the tariff threat has reignited market volatility."

 

This Tuesday, Federal Reserve Chairman Jerome Powell will attend a hearing of the Senate Banking Committee to deliver a semi -annual monetary policy report and testify. The next day, he will also attend a hearing of the House Financial Services Committee.

 

After routinely reading out the testimony, Powell will start answering various questions from the lawmakers. The Federal Reserve's interest rate path may become clearer at that time.

 

 

Anthony Saglimbene, the chief market strategist at Ameriprise Financial, said that although there is uncertainty regarding tariffs, the earnings season is generally a positive factor for the stock market.

 

Regarding geopolitical situations, leaders from many countries worldwide will participate in this week's Munich Security Conference. There are reports that the Trump administration will put forward a peace plan to end the war between Russia and Ukraine.

 

 

 

Monday: Japan's December trade balance, the Eurozone's February Sentix investor confidence index, and European Central Bank President Christine Lagarde give a speech.

 

Tuesday: The U.S. January New York Fed 1-year inflation expectation, France's fourth-quarter ILO unemployment rate, the U.S. January NFIB small business optimism index, Bank of England Governor Andrew Bailey gives a speech, Cleveland Fed President Loretta Mester speaks on the economic outlook, and Federal Reserve Chairman Jerome Powell attends a Senate hearing.

 

Wednesday: U.S. API crude oil inventory for the week ended February 7th, the U.S. January unadjusted CPI annual rate, the U.S. January seasonally adjusted CPI monthly rate, the U.S. January seasonally adjusted core CPI monthly rate, the U.S. January unadjusted core CPI annual rate, U.S. EIA crude oil inventory for the week ended February 7th, U.S. EIA Cushing, Oklahoma crude oil inventory for the week ended February 7th, New York Fed President John Williams gives a speech, Federal Reserve Chairman Jerome Powell delivers a semi -annual monetary policy testimony to the House Financial Services Committee, and OPEC releases its monthly oil market report.

 

Thursday: The U.S. 10-year Treasury note auction -winning rate on February 12th, the final value of Germany's January CPI monthly rate, the preliminary value of the UK's fourth-quarter GDP annual rate, Switzerland's January CPI monthly rate, the number of initial jobless claims in the U.S. for the week ended February 8th, the U.S. January PPI annual rate, the U.S. January PPI monthly rate, Atlanta Fed President Raphael Bostic speaks on the economic outlook, the IEA releases its monthly oil market report, and Indian Prime Minister Narendra Modi visits Washington.

 

Friday: The revised value of the Eurozone's fourth-quarter GDP annual rate, the U.S. January retail sales monthly rate, the U.S. January industrial production monthly rate, and the Central Bank of Russia announces its interest rate decision.