market outlook

Market Summary and Key Outlook (as of April 29, 2025)

Josh

— 2 min read

I’m sorry for missing yesterday. The entire Spain experienced a blackout, and I was among the unfortunate who had no power or mobile signal until after midnight.

Global Financial Condition Highlights

  • Tensions around US-China trade negotiations remain delicate, with ongoing backchannel contacts and conflicting public statements. Positive signals on tariffs and trade deals are supporting risk sentiment but uncertainties persist.
  • US Treasury Secretary Bessent indicates potential for near-term trade agreements with India and possibly other Asian allies like Japan, South Korea, and Australia, which could sustain risk-on mode.
  • US manufacturing data (DALLAS FED) shows a significant contraction at -35.80, signaling ongoing economic slowdown, but markets remain sensitive to trade developments.
  • US and China trade negotiations appear to be progressing quietly, with some exemptions on tariffs from China and indications of de-escalation, though official talks are still cautious and secretive.

Currencies & Forex Markets

  • USD: Slightly bullish bias expected due to risk-on sentiment and potential month-end dollar buying. US tariffs are softening, supporting dollar recovery.
  • EURUSD: Likely bearish short-term (target around 1.0850), as recent risk-on flows driven by trade optimism have decoupled from fundamentals. Long-term bullish thesis remains, with year-end target near 1.20, assuming trade agreements materialize.
  • USDCHF: Bullish scenario if tariffs progress positively; weekly engulfing pattern suggests potential for a significant squeeze higher (target around 0.8680). Risk signals from tariffs and risk-on environment support this view.
  • GBPJPY: Market sentiment remains cautious, with recent risk-on moves and short-term bullish potential, but some traders warn of a possible bull trap. Still, overall trend supports short positions if risk appetite persists.
  • Gold: Short-term downside target near 3100 on elevated risk appetite and progress on trade talks. Long-term outlook remains bullish (target 3700 by year-end) if geopolitical tensions or sanctions escalate. Recent bullish reversal on weekly charts indicates strong support.
  • Cryptocurrencies: Bitcoin shows signs of recovery from recent lows; sentiment remains cautiously risk-on.

Major Asset & Equity Outlooks

  • S&P 500: Short-term support near 5500, with some analysts expecting a potential dip below 5000 by summer if trade negotiations falter. Risk-on environment and positive technicals (smart money index buy signal) favor a cautious bullish stance, but overall caution remains due to economic slowdown signals.
  • European & Asian equities: Risk-on signals from US trade progress support stability, but underlying economic concerns (US recession risk, shrinking money supply) temper optimism.
  • Bond markets: US yields (US10/30yr) tied to sentiment shifts; expectations of rate pauses and trade deal optimism support yields staying stable or rising modestly.

Currencies & Individual Currencies

  • US Dollar (USD): Slightly bullish, supported by risk-on flows, month-end buying, and de-escalation on tariffs.
  • Euro (EUR): Slightly bearish in the short term due to risk-on sentiment and declining safe-haven demand, but long-term base remains strong if US-China trade binds improve.
  • Swiss Franc (CHF): Expected bullish continuation from a weekly engulfing pattern and risk-on conditions, with targeted breakout levels at 0.8680.
  • Yen (JPY): Still attractive for shorts (e.g., GBPJPY), but market sentiment can trigger quick reversals; cautious approach advised.
  • Gold: Short-term downside to ~3100, supported by improved risk appetite; long-term bullish trend remains intact, targeting 3700 by year-end.
  • Cryptos: Slight recovery underway, with Bitcoin and Solana supported by risk-on flows and market optimism.

Summary

Market sentiment remains cautiously optimistic about near-term trade deal progress and de-escalation of trade tensions, especially with India and Asian partners. Despite ongoing economic slowdown signals, risk-on conditions prevail, supporting equities, the dollar, and certain currencies like USDCHF. Gold faces short-term pressure but maintains a long-term bullish outlook contingent on geopolitical tensions or sanctions escalation.

Overall: Markets are tilted towards risk-on, supported by trade optimism; however, underlying macroeconomic vulnerabilities suggest volatility and caution for the coming weeks.

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