Global Economic Outlook U.S. Employment, Monetary Policy and Trade Tensions
Global economic outlook: Markets are awaiting the February employment report on Friday, a key factor for the Fed’s rate strategy. January showed weaker-than-expected job growth, but the unemployment rate fell to 4.0%, with wages rising to 4.1%. S&P Global Market Intelligence notes that this data supports a more gradual rate-cutting approach in 2024.Investors are analyzing how the economic outlook evolves after the November elections. The market expects three additional 25-basis-point cuts through 2026, with the next one anticipated in July.
Trade Tariffs and a Stronger Dollar
On March 4, tariffs on imports from Canada, Mexico, and China take effect, impacting the global economy. Uncertainty has strengthened the dollar and reduced U.S. bond yields. Analysts are assessing whether public sector job cuts will affect employment data. ING economist James Knightley expects this effect to take months to materialize. Purchasing Managers’ Index (PMI) data and business surveys show declining confidence.
Expectations for the Bank of Canada and Its Monetary Policy
Canada will release its February employment report on Friday and January trade data on Thursday. Fourth-quarter GDP exceeded expectations, raising doubts about the continuation of the rate-cutting cycle. Markets assign a 57% probability to a rate cut at the Bank of Canada’s next meeting. However, 25% tariffs on Canadian exports could influence future decisions. Markets will watch how the economy responds to these restrictive trade measures.
The European Central Bank and the Future of Interest Rates
The ECB is expected to lower the deposit rate to 2.50% at its next monetary policy meeting. Markets are assessing whether another cut will follow in April or if a more cautious approach will prevail. Increased defense spending could pressure inflation, limiting room for further cuts. According to LSEG, the rate could fall below 2% by September. The ECB will also update its GDP and inflation forecasts for the eurozone.
U.S. and U.K. Revive Trade Talks Under President Trump
President Donald Trump announced the revival of U.S.and U.K. trade talks after meeting British Prime Minister Keir Starmer…
China and Its Economic Strategy for 2025
The National People’s Congress will define China’s economic goals, focusing on GDP growth. The 5% target is expected to remain, requiring greater fiscal stimulus and expansionary policies. Goldman Sachs projects net government bond issuance will rise to 13 trillion yuan in 2025. Trade tensions with the U.S. could slow the rollout of new stimulus packages. Friday’s trade data will assess the initial impact of Trump’s tariffs on Chinese imports.
Key Indicators in Europe and the United Kingdom
France, Germany, Italy, and the eurozone will release manufacturing and services data this week. Preliminary February inflation data will be published on Monday, followed by producer price data on Wednesday. The UK will release data on consumer credit, mortgages, and business activity on Monday and Wednesday. The Bank of England closely monitors housing market trends and economic slowdown risks. Debt auctions in Germany, Spain, and France will round out the European financial agenda.
Financial Events in the Nordic Countries
Sweden will release February inflation data on Thursday. Denmark and Norway will hold bond auctions on Wednesday, key to gauging market confidence. Analysts are watching how Scandinavian central banks respond to global economic volatility. Nordic economies continue to face challenges from high interest rates and global trade. These indicators will provide a clearer picture of the region’s economic outlook for 2025.
