The Morning Edge: Fed Officials Signal Caution as Economic Uncertainty Grows

New York Fed President John Williams said Monday that current monetary policy remains "well positioned" to navigate economic risks this year, though he acknowledged inflation could reaccelerate. "We're in a moderately restrictive stance that's helping cool price pressures," Williams told Yahoo Finance, emphasising the Fed will maintain rates "for some time" to assess incoming data before considering changes.

Richmond Fed President Thomas Barkin struck a more cautious tone in a CNBC interview, noting the dual risks of Trump's tariffs: "I'm nervous they'll boost inflation and hurt jobs." With trade policy shifts and federal downsizing clouding the economic outlook, Barkin argued for patience: "There's too much uncertainty right now—we should wait and see.

As markets parse mixed signals, one thing is clear: The Fed's next moves will depend on which falters first in this volatile policy environment, inflation or growth.

Data
Goldman Sachs has sharply increased its probability of a US economic contraction to 35% from 20% and downgraded its 2025 GDP growth forecast to 1.5% from 2.0%, pointing to President Trump's tariffs as a major destabilising force. The bank now anticipates three Federal Reserve rate cuts this year—up from two—as policymakers respond to slowing growth and market turbulence. Simultaneously, Goldman slashed its S&P 500 year-end target to 5,700—the most conservative estimate on Wall Street—reflecting heightened risks to corporate earnings. With Barclays' 5,900 forecast now the second lowest, the revisions signal growing Wall Street scepticism about the economy's ability to withstand escalating trade tensions.

Markets
Overnight
US Stocks showed surprising resilience on Monday as the S&P 500 and Dow temporarily looked past looming trade uncertainties, ahead of Wednesday's expected tariff details from the Trump administration. Financials led the charge, with Discover Financial soaring 7.5% and Capital One gaining 3.3% on merger approval optimism, while the defensive consumer staples sector rose 1.6% as investors sought safety. The muted reaction comes despite President Trump's Sunday warning that upcoming tariffs will be "all-encompassing," expanding existing duties on steel, aluminium, autos, and Chinese goods. Markets appear to be betting the measures may be less severe than feared - or that strong corporate earnings can offset the impact. 

US Treasury yields fell 3.5 basis points to 4.221% as investors are increasingly pricing in 80 basis points of Fed rate cuts this year, betting that slowing US economic growth will outweigh temporary inflationary pressures. All eyes now turn to Fed Chair Jerome Powell’s Friday speech, which could provide crucial clarity after a week of mixed signals from central bank officials. With bond markets positioning for dovish moves, Powell’s remarks may determine whether these bets hold—or if traders need to recalibrate their outlook.

The US dollar reversed early losses to climb against major currencies on Monday as investors sought safety amid growing tariff tensions. The greenback gained 0.07% against the yen to 149.93, while the euro dipped 0.11% to $1.0815. A stronger rally was seen against the Swiss franc, with the dollar jumping 0.48% to 0.884 francs, pushing the broader dollar index up 0.17%. As the dollar strengthens, it signals that—for now—investors see the US as relatively insulated from the coming trade storms. 

Brent crude oil prices jumped 2% on Monday, hitting its highest level in five weeks as traders priced in potential supply disruptions from escalating geopolitical tensions. Brent crude rose 1.5% to $74.74 a barrel after President Trump threatened to impose 25-50% "secondary tariffs" on buyers of Russian oil. The rally reflects growing market anxiety after Trump declared he was "pissed off" at Putin and warned of punitive measures if Russia obstructs Ukraine peace efforts. With additional threats looming against Iran, traders are bracing for a potential double supply shock that could tighten global markets.

Day’s Ledger

Economic Data:

• China March Caixin Services PMI
• Eurozone March CPI Data
• Eurozone February Unemployment Rate
• US February Construction Spending Data"
• US March S&P Global Manufacturing PMI
• US March ISM Manufacturing PMI 
• US February JOLTS Job Openings Data
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• Corporate Actions:
• Mini Diamonds India board to discuss preferential issue of shares
• Galactico Corporate Services board to discuss scheme of arrangement
• Jetking Infotrain board to discuss preferential issue of shares

Policy:

• ECB President Lagarde Speaks  
• ECB's Lane Speaks

Tickers

• ADANI GREEN ENERGY's subsidiaries commissions 480.1 MW power projects in Gujarat
• AMBUJA CEMENTS Board reappoints Ajay Kapur as managing director for two years
• BRIGADE ENTERPRISES signed contract for a luxury residential project in Mysuru with gross development value of ₹3 billion.
• BSE Ltd board has recommended the issue of two free shares for every one share held.
• ENGINEERS INDIA bagged consultancy assignments worth ₹2.45 billion from state-owned entities for Maharashtra and West Bengal projects.
• FEDERAL BANK signed MoU to acquire 4% equity in Ageas Federal Life Insurance from Ageas Insurance International NV.
• GE POWER INDIA completed slump sale of hydro business to Ge Power Electronics.
• HALDIRAMS announces agreement with Singapore investment major Temasek
• HBL ENGINEERING received 5 contracts worth ₹7.63 billion for Kavach across 413 stations.
• HINDUSTAN AERONAUTICS informed that Defence Ministry has signed two contracts for 156 LCH Prachand helicopters worth ₹627 billion.
• ICICI PRUDENTIAL LIFE INSURANCE received ₹3.28 billion tax demand for AY 2023–24; company will appeal the order.
• INTERGLOBE AVIATION, the parent company of IndiGo, has announced that it has received a penalty order ₹9.44 billion from the Income Tax Department for Assessment Year 2021-22.
• ITC has signed pact with Aditya Birla Real Estate to acquire Century Pulp and Paper for ₹35 billion.
• LTIMINDTREE expanded strategic partnership with Google Cloud to deliver Agentic AI-powered solutions for global clients.
• MANKIND PHARMA completes amalgamation of three subsidiaries
• MANKIND PHARMA informed that NCLT approved merger of BSV Pharma into Bharat Serums & Vaccines; effective May 9, 2022.
• NEWGEN SOFTWARE arm secures order worth $1.58 million
• ONE 97 COMMUNICATIONS received cautionary notice from NSE and BSE over delayed earnings call intimation for FY24 results.
• POWER MECH PROJECTS got ₹4.25 billion order from Mirzapur Thermal Energy (Adani Power subsidiary) for civil and steel works.
• PRESTIGE ESTATES PROJECTS board approved investment of ₹16.25 billion in PRESTIGE HOSPITALITY VENTURES via rights issue.
• SHREE CEMENT informed that clinker production capacity at Nawalgarh plant increased from 3.8 to 4.5 MTPA through mining equipment and asset upgrades.
• VARUN BEVERAGES signed agreements to acquire 100% stake in SBC Beverages Ghana and SBC Tanzania.
• WAAREE ENERGIES inaugurates 5.4 GW solar cell gigafactory facility in Chikhli, Gujarat
• WENDT INDIA acquired global rights to WENDT trademarks from Wendt GmbH in 40 countries for up to €3.8 million.

 Must Read

• Fresh US tariff threat looms over purchase of Russian oil
• BMC sets record on property tax, collects 99.5 % of 2024-25 target
• Bajaj Hindusthan Sugar close to default
• IMD predicts hotter-than-usual summer for India
• Tax benefits, infra boost outside metros drive a second home boom
• After nearly 4 decades, govt to revise farm and rural inflation gauges
• Wheat output may exceed record official estimate
• Trump says reciprocal tariffs will ‘start with all countries,’ rejects narrower launch
• IMF's Georgieva says recession is not on the horizon despite tariff worries
• Fed officials cautious on rates amid tariff-related inflation risks

Daily Mantra

I learned that we can do anything, but we can't do everything... at least not at the same time. So think of your priorities not in terms of what activities you do, but when you do them. Timing is everything