As the second quarter rattles on, the global financial landscape looks to exit its critical phase as quickly as possible. For the week of May 5, 2025, traders will look to the economic docket and are hopeful of policy developments. Of great attention is U.S. – China tariff negotiations and Federal Reserve interest rate decision. Central bank meetings in Poland, Norway, U.K. and Brazil will also gather spotlight, with key inflation readings from Turkey, Philippines, Mexico, and Switzerland.
United States
Market participants are expecting that the Federal Reserve will keep interest rates unchanged, while maintaining its range of 5.25 percent to 5.50 percent. At the same time, effects of uncertainty tied to the presidents tariff agenda will also be evaluated. To date, President Trump has signaled openness to lowering duties on Chinese imports. Paired with cooling job gains and sub par wage growth, recent indicators support the Fed’s cautious stance. With the ISM services PMI on the calendar, a miss of analysts expectations will surely fuel the Fed’s outlook in the face of ongoing trade uncertainty.
Canada
Canada’s upcoming economic calendar is set to reveal Employment data, trade balance figures, and IVEY PMI. It’s unemployment rate is expected to come in at 6/3 percent, while analysts expect PMI to decline towards 52.0, signaling Canadian businesses are cautiously optimistic. Inflation dynamics also support this caution as prices eased to 2.3 percent year-over-year in March, down from 2.6 percent in Febraury. With Canada’s economy cooling, the Bank of Canada is likely to keep rates on hold for now and wait for clearer signs from the labor and price trends.
Asia-Pacific
China is expected to release weaker than expected trade figures for April 2025 due to its record exports ahead of businesses front-loading ahead of tariff increases. Exports expectations lie for -3.5 percent YoY and imports at -2.8 percent YoY.
Japanese markets are keeping a close eye on household consumption set to release as forecasts point to contraction of 1.1 percent. A lower than expected release will sour an already bearish outlook for the region in light of tariff concerns impacting its auto market.
Global themes to watch
Tariff concerns remain focus as President Trump’s on again-off-again tariffs create uncertainty for global supply chains, investments, and inflation. If developments do not present itself, global markets could test recent lows.
Central bank policies and clues thereof are set to be overanalyzed. While the Federal Reserve and Brazil remain in tightening mode, the Bank of England and NBP are pivoting to rate cuts.
Explore More on Sigmanomics
Read more:
https://www150.statcan.gc.ca/n1/daily-quotidien/250415/dq250415a-eng.htm?
https://economics.td.com/ca-employment?
