Quarter-End Checkpoint: Inflation, Trade & Sentiment

Good morning. With the first quarter drawing to a close, investors are digesting a heavy mix of policy developments, economic data, and inflation expectations. U.S. stocks are poised to open slightly higher this morning as traders look ahead to the February PCE inflation report and fresh consumer sentiment data. Bond yields are steady after yesterday’s GDP revision and jobless claims data showed continued resilience in the U.S. economy.

The week has been defined by shifting expectations around trade policy, with President Trump officially announcing a 25% tariff on imported autos and signaling more targeted action to come on April 2. Market leadership has rotated away from mega-cap tech, while defensive and value-oriented sectors have outperformed amid elevated uncertainty.

Today’s economic calendar features the February PCE index—the Fed's preferred inflation gauge—along with the final read on March consumer sentiment and speeches from Fed Governors Barr and Bostic. While no major earnings are scheduled today, market attention will remain focused on pricing data and the evolving trade outlook.

Chinese Firms Brace for Tariff Fallout
Chinese exporters are quietly shifting strategies in advance of the April 2 reciprocal tariff rollout, seeking to diversify markets and reduce exposure to the U.S. economy. Despite public silence, many firms acknowledge the U.S. remains a critical trading partner, and the unpredictable nature of tariff enforcement is raising risks across the supply chain. Read more →

Options Volume Surges Ahead of 'Tariff Liberation Day'
Investors are flooding into options tied to sectors most vulnerable to trade policy shifts, including autos and semiconductors. As April 2 approaches, demand for downside protection is rising alongside interest in names that could benefit from domestic production incentives. Read more →

Tariff Unpredictability Raises Global Economic Risk
The Economist warns that the real damage of the Trump administration’s trade strategy may stem from its erratic nature. While some tariffs may be negotiable or delayed, the broader unpredictability could cause businesses to pull back on investment and reduce hiring. Read more →

Macro Traders Adjust Tactics for Tariff Turbulence
Top global macro hedge funds are reducing directional risk and increasing hedges in anticipation of next week’s policy actions. Managers are eyeing sectors like copper, autos, and chipmakers as volatility hotspots and are emphasizing flexibility amid uncertainty. Read more →

China’s Housing Market Faces New Pressures
In China, real estate agents are ramping up promotions to counter persistent weakness in the property sector. From themed open houses to steep price cuts, the slowdown continues to weigh on local growth—another concern as global demand shifts under tariff pressures. Read more →

CoreWeave Prices IPO at $40, Raises $1.5 Billion
After downsizing its offering and reducing its valuation, AI infrastructure firm CoreWeave completed its IPO at $40/share. Despite skepticism around its high debt load and slowing demand, the deal is seen as a key test of investor appetite in the AI space post-Nvidia rally. Read more →

Lululemon Shares Drop on Soft Forecast
Lululemon shares fell sharply after the company issued a cautious outlook for Q2, citing macroeconomic headwinds and uneven consumer demand. While Q1 results beat expectations, the company joins other retailers in signaling a more challenging operating environment ahead. Read more →

U.S. equity markets finished slightly lower Thursday as markets digested President Trump’s announcement of a 25% tariff on all autos not manufactured in the U.S. The S&P 500 declined 0.3%, while the Nasdaq slipped 0.5%. The Dow outperformed slightly, down just 0.1%. Auto stocks, particularly global manufacturers and their suppliers, traded lower following the news. However, used car rental firms and aftermarket parts retailers saw gains on expectations that the new tariffs could boost domestic demand.

Defensive sectors led Thursday’s session, with consumer staples and healthcare outperforming, while communication services and technology lagged. Bond yields moved modestly higher, with the 10-year Treasury yield closing at 4.36%. In commodities, gold surged to another all-time closing high at $3,061/oz, and oil prices edged up slightly, supported by strong U.S. refining activity and ongoing geopolitical tension. The dollar strengthened modestly against most major currencies.

Economic data remained supportive. The third estimate of Q4 GDP was revised slightly higher to 2.4%, driven by lower imports, while initial jobless claims held steady at 224,000 — consistent with a still-healthy labor market. February’s pending home sales rose 2.0% month-over-month, suggesting resilient housing demand even in a high-rate environment. Meanwhile, data on inventories and the advance goods trade balance came in roughly in line with expectations.

The market remains focused on today’s release of the February PCE Price Index — the Fed’s preferred inflation gauge — as well as consumer sentiment data and speeches from Fed officials Barr and Bostic. While investors continue to grapple with trade uncertainty, particularly the potential impact of reciprocal tariffs coming April 2, many remain anchored by signs of economic strength and earnings resilience across sectors.

There are no notable earnings reports scheduled for Friday, March 28.

Asia:

Europe (as of 6:00 AM ET):

Traders are heading into the weekend with a mix of resilience and caution. While recent economic data continues to show stability, the growing uncertainty around trade policy—particularly in the run-up to April 2’s reciprocal tariff announcement—remains a key overhang. Today’s PCE inflation report and consumer sentiment data could help clarify the Fed's near-term outlook.

As we close the books on Q1, next week will kick off a new quarter with a slate of key economic releases. March ISM Manufacturing (Monday) and Services (Wednesday) reports will offer fresh insight into the pace of economic activity, while the March jobs report on Friday will be the headline event, with markets watching for any signs of softening in the labor market.

On the earnings front, the calendar remains quiet, with no major companies reporting until the second week of April. However, commentary from Fed officials and clarity around April 2 tariff implementation could serve as early catalysts for Q2 positioning. Investors would do well to stay nimble as the next quarter of 2025 begins.