4/27/2025

Good Morning.

Shein, a Chinese e-commerce giant, has significantly increased prices for U.S. shoppers. As much as 377% on certain items. These increases are in response to U.S. tariffs and the elimination of "de minimis". Previously, goods under $800 would not face tariffs. These changes in trade policy are a perfect example of the extremely low cost and large volume of goods that U.S. consumers have grown used to. It will be important to watch how U.S. demand changes as costs increase. 

Apple has set an ambitious goal to manufacture all iPhones bound for the U.S. and other markets entirely in India. This means Apple would have to double its manufacturing capacity in India to approximately 80 million units.

Gold prices have reached unprecedented levels, reaching approximately $3,500 per ounce. This rally has been driven by investor concerns over inflation, a weakening U.S. dollar, and geopolitical tensions. Gold has outperformed traditional investments like U.S. Treasuries and equities. However, recent de-escalation in U.S. China relations has led to a pullback in gold prices, highlighting the market's extreme reactions and questioning whether this rally is sustainable.

• Major financial institutions estimate that sustained central bank purchases and global economic uncertainties will cause prices to climb.

  • JP Morgan: $4,000/0z by mid-2026

  • Goldman Sachs: $3,700/oz by end of 2025

In today’s newsletter, we will cover: 

• Markets

  • Stocks Bounce Back

  • Tech Driven Rally

  • Earning Season Q1

  • Treasury Market Moves

  • Global Growth (GDP)

• U.S. Treasuries' safe-haven status in question

• ECB Cuts Rates as Global Easing Trend Grows; Fed Holds Steady

• What to look out for this week!

Markets 

• Stocks Bounce Back: After a sharp decline on Monday, major U.S. stock indexes rallied over the next four days, recovering from the previous week’s losses. The NASDAQ jumped 6.7% for the week, while the S&P 500 gained 4.6% and the Dow added 2.5%.

• Tech Driven Rally: The NASDAQ’s strong weekly performance relative to other major U.S. indexes was driven by robust quarterly results from leading technology companies and broad strength across the tech sector. Tech stocks in the S&P 500 surged nearly 8% on average, while the consumer staples sector fell more than 1%.

• Earning Season Q1: As earnings season hit its peak, the earnings growth rate for S&P 500 companies improved. As of Friday, first-quarter net income was projected to rise 10.1% year over year, based on reported results and analyst estimates for companies yet to report, according to FactSet. That’s up from a 7.0% growth projection just a week earlier. 

• Treasury Market Moves: U.S. government bond prices rose and yields fell as volatility in the fixed-income market eased. The 10-year U.S. Treasury yield ended Friday around 4.26%, down from a recent intraday high of 4.59% on April 11. Longer-dated Treasuries saw similar moves, with the 30-year bond yield closing around 4.72%.

• Global Growth (GDP): The International Monetary Fund lowered its global economic growth forecasts, citing risks from rising tariffs. It now projects GDP growth of 2.8% in 2025 and 3.0% in 2026, down from the 3.3% estimates issued three months ago, before the recent escalation in tariffs.

U.S. Treasuries' safe-haven status in question

The U.S. Treasury market is viewed as a safe haven for global investors because of the faith in the U.S. government and its unparalleled liquidity. It is now experiencing a crisis of confidence that could have lasting implications. Sharp sell-offs have caused yields to soar. The 10-year yield jumped to 4.5% and the 30-year yield surged more than 50 basis points in three days.

(Bloomberg)

• This volatility has been triggered largely by bond investors' reactions to tariffs 

• Investors fear the combination of higher inflation, rising deficits, and a weakening of the U.S. rule of law. 

• Investors are demanding higher yields and potentially looking for alternatives to U.S. debt.

• These developments carry major implications for the American economy, raising the cost of borrowing, weakening the dollar’s influence abroad, and tightening financial conditions.

• Trump’s rapid decision to pause the reciprocal tariffs for 90 days is largely seen as a reaction to the Treasury market's correction.

Approximately 30% of U.S. debt is held by foreign investors. Large holders like China and Japan have reduced their Treasury holdings. While these reductions have not been significant, it is a sign that their appetite for U.S. debt is not limitless. 

The weakening of Treasuries’ safe-haven status is a major shift in global markets. It introduces a new layer of uncertainty into the flow of capital that previously rushed to U.S. treasuries in times of volatility.

ECB Cuts Rates as Global Easing Trend Grows; Fed Holds Steady

The European Central Bank cut its key rates by 25 basis points, lowering the deposit rate to 2.25%, effective April 23, 2025. The move comes as inflation remains below target and growth weakens. Officials signaled openness to a larger cut in June if forecasts worsen.

The ECB’s decision fits a broader global pattern: major economies like Canada, India, Australia, and South Korea are also adopting expansionary monetary policy to hedge against trade uncertainty and slowing demand. The U.S., however, remains on pause. After a rate cut last December, the Federal Reserve has held rates steady, citing persistent inflation risks.

What To Look Out For This Week!

Tuesday Earnings: General Motors, Visa, Coca-Cola, HSBC, Pfizer, Spotify, American Tower Corporation, Starbucks, and PayPal 

Wednesday: President Donald Trump's 100th day in office, GDP Q1, PCE for March, 

• Earnings: Microsoft, Meta, UBS, Caterpillar

Thursday: Initial jobless claims, 

• Earnings: Apple, Amazon, Eli Lilly, Mastercard, McDonald’s, CVS Health, Airbnb 

Friday: U.S. employment report, 

• Earnings: ExxonMobil, Chevron, Shell 

We are two college students on a mission to immerse ourselves in the financial industry. We are eager to learn more and make new connections. Our goal is to share exciting and informative content that provides a broad picture of current events and offers valuable insights.

Founders: Ben Banchik, Zachary Singer

Additional Contributors: William Le

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