Treasury yields dropped amid recession fears; global stocks plunged, led by tech. Trade tensions escalated. Oil and gold fell, while Bitcoin rose slightly; VIX spiked sharply.

Treasury yields declined sharply over the week, with short-term maturities outperforming their longer-term counterparts. Yields across the curve fell between 20 and 30 basis points. The 10-year Treasury yield dropped below the 4.00% mark—its lowest level since prior to Election Day—while the 30-year yield dipped below the federal funds rate. Meanwhile, the 2-year yield reached its lowest point since early October. This broad-based retreat in yields reflects mounting recession concerns and a surge in demand for safe-haven assets.

Equity markets endured a significant sell-off, marking the worst weekly performance for global stocks since the onset of the COVID-19 lockdowns in March 2020. Heightened trade tensions contributed to the downturn, with indexes experiencing widespread declines. The energy, technology, and financial sectors led the losses. The so-called "Magnificent Seven" stocks plunged 10.20%, erasing $1.4 trillion in market capitalization—an unprecedented weekly loss. The CBOE Volatility Index (VIX) surged more than 80%, signalling heightened market anxiety and positioning near extreme risk levels.

In currency markets, the U.S. dollar weakened by 1.14% against the euro. Commodity markets were also under pressure, with West Texas Intermediate (WTI) crude oil tumbling 9.73%, driven largely by China’s imposition of new tariffs on U.S. goods—an escalation in the ongoing trade conflict that has further weighed on investor sentiment. Gold declined 1.98% for the week, while Bitcoin managed a modest gain of 1.16%.

U.S. job growth exceeded expectations in March, but rising unemployment, slowing wage growth, and economic uncertainty signal a weakening labour market.

U.S. job growth exceeded expectations with 228,000 jobs added, but the labour market shows signs of weakening. Unemployment rose to 4.2%, and wage growth slowed to 3.8%, indicating strain on household purchasing power. Full-time employment increased by 459,000, while part-time jobs declined. Job gains were mainly in leisure, hospitality, and healthcare, but federal government jobs decreased. The labour market outlook is further challenged by slowing consumer sentiment and economic uncertainty. Meanwhile, U.S. manufacturing and services show contraction, with declining orders, production, and employment. The ISM manufacturing index dropped below 50, indicating contraction, while the services sector also experienced a slowdown, particularly in employment. Tariffs are raising concerns about supply chain disruptions and inflation, further contributing to economic stagnation. A worsening labour market and increasing prices could undermine consumer confidence and spending.

U.S. job growth beat expectations in March, but rising unemployment, slowing wage growth, and economic uncertainty point to a weakening labour market and consumer sentiment.

Despite a stronger-than-expected increase of 228,000 jobs in March—well above the consensus forecast of 140,000—the US labour market outlook is darkening amid growing economic uncertainty. Downward revisions to previous months reduced the net gain to 180,000 jobs, and the unemployment rate ticked up to 4.2%, slightly above expectations. Notably, full-time employment increased at a greater rate than part-time positions, which saw a decline, signalling a shift in the workforce composition. Wage growth slowed to 3.8% from 4%, signalling further strain on household purchasing power, especially with inflation set to rise due to tariffs. Key job gains were concentrated in leisure and hospitality (43,000), and private education and healthcare services (77,000), with retail contributing 24,000; however, federal government employment declined by 4,000 and is likely to contract further in the coming months. With consumer sentiment weakening, government austerity intensifying, and equity markets under pressure, concerns about job security are growing—raising the risk of future job losses. Given that consumer spending accounts for 70% of the US economy, any sustained pullback will likely have serious implications for employment trends.

We expect further deterioration in the labour market, with rising unemployment and negative real wage growth by summer, further squeezing consumer spending power and confidence.

U.S. manufacturing and services sectors show signs of contraction, with declining orders, employment, and production, while inflationary pressures and economic uncertainties persist.

The tariffs, initially intended to stimulate U.S. manufacturing, are instead raising concerns about their impact on supply chains and the risk of foreign retaliation, particularly as the domestic economy shows signs of slowing. The ISM manufacturing index for March dropped to 49.0 from 50.3, indicating a return to contraction and falling below the 49.5 consensus. This decline mirrors recent regional manufacturing data, which reports notable drops in employment, new orders, and production. Specifically, new orders decreased to 45.2 from 48.6, backlogs fell to 44.5 from 46.8, and employment dropped to 44.7 from 47.6. Production also declined to 48.3 from 50.7. The increase in prices paid to 69.4 from 62.4 suggests businesses are taking preemptive measures in anticipation of potential tariff impositions, signalling a real risk of higher consumer prices. These trends highlight the ongoing stagnation in the sector, which undermines the intended revitalization from tariffs, and underscore the inflationary pressures that could further strain the economy. The March ISM Manufacturing report paints a picture of stagflation, with rising prices, declining employment, and broader stagnation. Survey responses further highlight concerns around supply chain disruptions and a weakening economic outlook.

The March ISM Services PMI report presents a mixed outlook for the U.S. services sector, with the overall index registering at 50.8, below the anticipated 52.9 and down from 53.5 in February. The New Orders Index decreased to 50.4 from 52.2, signalling a slowdown in demand, while the Prices Paid Index fell to 60.9 from 62.6, indicating a moderation in inflationary pressures. Business activity showed moderate growth, rising to 55.9 from 54.4. However, the most concerning trend was a significant decline in the Employment Index, which dropped to 46.2, the lowest level since December 2023, marking the steepest month-to-month drop since April 2020. This sharp reduction in employment suggests a contraction in labour demand within the services sector, raising concerns about the sustainability of sectoral growth amid broader economic uncertainties.

We expect further deterioration in the U.S. labour market. Tariffs will drive higher prices, potentially worsening consumer sentiment.