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Welcome to another weekly roundup, traders. What a quarter it’s been! As we kick off the week (and Q2) on March 31, I’ve got my tea in hand and a lot to unpack. In Q1, we saw a whirlwind of trade war surprises, central bank maneuvers, and wild market moves – from record highs in gold to a correction in U.S. tech stocks. I’ll break down the key macro themes in the UK and US, dig into the outlook for major indices (S&P 500 and FTSE 100), FX majors (EUR/USD, GBP/USD, USD/JPY), and commodities (gold and oil), and highlight what to watch in the week ahead.

Macro and Political Roundup (UK & US)

United Kingdom: Here in the UK, the economic backdrop is a mix of cooling inflation and cautious policy. The Bank of England (BoE) held its base rate steady at 4.5% at the March meeting. Inflation is off the boil but still ~2.8% – above the BoE’s 2% target. With price pressures easing only gradually, the BoE is preaching patience and warning markets not to assume rate cuts are coming too soon. In fact, 8 of 9 MPC members voted to keep rates unchanged, with only one dove pushing for a cut. There’s “a lot of economic uncertainty” out there, as Governor Andrew Bailey noted, so the BoE is in wait-and-see mode, eyes peeled on incoming data at each meeting.

On the political front, the UK has seen a change of guard. A new government (yes, we actually had an election – I hope you didn’t blink and miss it) is settling in. Chancellor Rachel Reeves delivered a budget update recently, signaling a shift toward fiscal tightening – including an “imminent tax hike for employers” and likely cuts to public spending plans. This is notable: it suggests the new administration is serious about shoring up public finances (perhaps to gain credibility with markets), but it could also dampen growth a bit. The BoE remarked that this looming employer tax hike was probably behind some recent price increases in the services sector (businesses passing on costs, anyone?). The UK growth outlook is modest; the BoE nudged up its Q1 GDP forecast to a mere +0.25% (quarterly) – not exactly booming, but at least it’s growth. From a market perspective, a steadier UK government and cautious BoE provide a bit of clarity. Still, traders here will be watching any new policy announcements – after all, a new government’s early moves can sway sectors (think utilities, banks, and other regulated industries). In Westminster, there’s a saying: “steady as she goes” – and that seems to be the approach for now. (I, for one, am just relieved to have a little less drama on Downing Street this year!)

United States: Across the pond, it’s been anything but quiet. The U.S. macro story is dominated by two big themes: the Fed’s balancing act and President Trump’s return to “America First” policies. Let’s start with the Fed. The Federal Reserve held interest rates steady at its last meeting, keeping the federal funds rate in restrictive territory. But unlike the BoE, the Fed’s challenge isn’t just slowing growth – it’s also sticky inflation that won’t get back in its box. Fresh data showed inflation metrics (like February PCE prices) ticking higher and consumer spending stalling out when adjusted for inflation. In fact, real consumer spending was basically flat, and Q1 growth forecasts are being marked down (Goldman Sachs halved their Q1 GDP forecast to 0.6%. Not a great combo: weak spending + stubborn prices. To make matters more interesting, inflation expectations have jumped – the latest University of Michigan survey showed long-run inflation expectations above 4% (yikes, that’s double the Fed’s target). This has Fed officials uneasy; it’s the kind of data that makes them less likely to cut rates even as growth slows. In short, the Fed is caught in a potential stagflation bind: slower growth with upward price pressures. For now, they’re signaling caution – willing to wait longer for inflation to ease and not rushing to pivot dovish, especially if those expectations stay elevated.

Now layer in the political angle: the return of President Donald Trump. In Q1, Trump wasted no time reasserting his trade-war stance. The U.S. announced a range of import tariffs on various goods (in true 2018 throwback fashion), prompting retaliation from other countries. This escalation in global trade tensions has not gone unnoticed in markets. The BoE specifically cited U.S. trade policy uncertainty as a global risk factor, and indeed it’s rattled business confidence worldwide. From a trader’s perspective, this is a big deal: tariffs raise costs for companies (potentially hitting earnings and fueling inflation) and can disrupt supply chains. We’ve already seen U.S. equity investors start to take these tariffs seriously, with some ugly days for stocks when new measures were announced. The vibe is that the market is no longer treating Trump’s trade threats as mere bluster – they’re real, and they’re market-moving. One stark example: the S&P 500 fell about 5% this quarter, marking its worst quarter since 2022, largely on the back of these trade concerns and tech sector woes (more on that in a bit). There’s even talk of a fresh wave of tariffs to be unveiled soon, which keeps us all on our toes. I half-jokingly call it “Tariff Trauma” – every time a headline hits, algo trading bots go crazy, and so do a few traders’ blood pressure. On the U.S. political front, aside from trade policy, we’re also eyeing any fiscal moves. Thus far, the new administration seems focused on trade and immigration executive orders, with less noise about things like infrastructure or tax policy – but that could change. For markets, geopolitics (U.S.-China relations, Russia-Ukraine war, etc.) remain a wildcard coming out of DC. Summing up the macro: the U.S. is wrestling with policy-driven uncertainty (thanks to trade wars) on top of economic uncertainty. It’s a tricky cocktail, and it means we should be prepared for data surprises and headline shocks in equal measure.

Market Volatility and Sentiment

With all that backdrop, it’s no surprise that market volatility spiked in March. The VIX, Wall Street’s fear gauge, jumped into the 20s and even mid-20s during the worst of the sell-off – hitting its highest levels of the year so far. At one point in mid-March, the VIX reached around 27, a high not seen since late last year, as traders reacted to the combo of rate worries and tariff headlines. To put that in perspective: We’re nowhere near the panic extremes of the 2020 pandemic or 2008, but it was a wake-up call after the relatively calm start to the year. By late March, the VIX settled back down below 20 (it was about ~18-19 toward quarter-end, suggesting some of the immediate fear has ebbed as markets found their footing. Still, volatility is higher than the sleepy lows of, say, 2021. It’s like the market went from dozing to at least being on alert.

Sentiment is very much a tug-of-war right now. On one side, you have optimism from certain corners: people figure the worst of inflation might be behind us, the Fed/BoE pauses mean we’re at or near peak rates, and maybe – just maybe – some resolution on trade disputes could emerge (one can hope). On the other side, you’ve got those recession storm clouds and geopolitical wildcards. When I chat with fellow traders, I hear a lot of nervous optimism – folks want to ride the rallies but are quick to hit the exit on any bad news. We saw that clearly in Q1: global stocks were flat overall (MSCI World Index didn’t move much) but under the surface there was rotation and turmoil. U.S. tech giants got whacked (the so-called “Magnificent Seven” lost nearly $2 trillion in market cap collectively as investors rotated out), whereas areas like European defense stocks soared (for unfortunately obvious reasons) and even Chinese shares jumped. That tells me sentiment isn’t one-size-fits-all; it’s selective. People are hedging bets – selling what looks vulnerable and buying what could thrive in this environment (gold, defense, emerging markets, etc.).

From a volatility standpoint, one positive development: the bond market stabilized a bit. U.S. Treasury yields actually fell in Q1 (10-year yield down about 20 bps over the quarter, which gave a respectable +2.7% return on Treasuries – a sign that at least the bond folks think the Fed won’t need to go higher and might even ease later. Lower yields helped calm equity volatility a touch. But make no mistake, if we get a bad surprise (like a significantly hot inflation print or an escalation in the trade war or other geopolitical crisis), volatility could roar back overnight. I’m keeping one eye on the VIX and one on the newsfeed at all times. As a trader, this is an environment to stay nimble. It’s not full-on fear or full-on greed; it’s somewhere in between, flipping by the day. Or as I like to say, volatility is life – and lately it’s been living up to that. (I haven’t hit the panic button yet, but I definitely gave it a dust-off in March, just in case!)

Stock Markets: S&P 500 and FTSE 100

Despite sharing the global stage, the U.S. and U.K. stock markets have had rather different experiences recently. Let’s break down each:

• S&P 500 (US): The S&P 500 just closed out a bruising first quarter. It’s down roughly 5% in Q1 – the worst quarterly performance since 2022 for the index. Much of the damage came in February and early March, when the index slid into a correction (over 10% down from its all-time high in Feb). What drove it? A combo of factors: Big Tech selloff, rising yields (earlier in Q1), and those tariff worries hammering multinational stocks. Essentially, the market started 2025 hopeful for a “soft landing”, and then reality bit. By March 13, the S&P had fallen more than 10% from its peak. The good news is, since mid-March we’ve seen a decent bounce. As of this writing, the S&P is trading in the mid-5570s range, which is a key technical level. In fact, last week we saw the index gap higher and test that 200-day from below; it’s now acting as resistance around 5750–5800. For the bulls, 5800 is the line to beat – a close above that could trigger further buying and signal that this bounce has legs. On the downside, initial support is down at the 5500 area (the March lows were around 5500-5520). A retest of those lows isn’t off the table if we get negative news. I’m watching that range (5500 support, 5800 resistance) like a hawk for the next big directional clue. Fundamentally, what could push the S&P out of this range? Well, earnings season is around the corner (kicking off mid-April) – and given Q1’s events, I expect a mixed bag, with companies likely cautious in guidance. Before that, macro data this week (ISM, NFP) could sway sentiment (strong data might be a double-edged sword: good for economy, but maybe bad thinking for Fed policy). Also any easing or worsening of the trade war rhetoric will directly affect the S&P (especially sectors like tech, industrials, autos – which have been caught in the crossfire). For now, the S&P’s mood is cautiously optimistic but jittery. It reminds me of myself before my morning caffeine: it wants to get going, but it’s not quite there yet. A solid push (be it a dovish Fed hint or a cooling in trade tensions) could revitalize the rally; lacking that, it may chop around. Bottom line: I’m bullish on U.S. equities only selectively – value sectors have held up, but high-fliers are still vulnerable. Risk management is key until we see either a breakout above resistance or a washout that sets up a nicer entry.

• FTSE 100 (UK): The UK’s FTSE 100 has been a different story – in some ways more upbeat. The FTSE actually hit a record high in March, reaching all-time highs around 8900 points. That’s right: while Wall Street was fretting, the London index quietly notched its highest level ever. As of now, the FTSE 100 is a bit off those highs (we saw a minor pullback amid the global volatility), but it’s still trading in the mid-8000s, which is impressive. Why the relative strength? A lot comes down to index composition and macro factors. The FTSE is heavy in energy, mining, and commodity stocks, as well as banks and defensive consumer staples. Q1’s big theme – commodities up, tech down – played right into the FTSE’s hand. Oil and mining giants benefited from sturdy commodity prices, and gold miners (and precious-metal related firms) got a boost from gold’s surge. Also, many FTSE companies earn revenue in dollars (but report in sterling), so the somewhat weaker pound versus last year helped juice their earnings in GBP terms. In other words, a soft dollar globally was a tailwind for the FTSE’s multinationals. Meanwhile, the sectors that struggled globally (like high-growth tech) are underrepresented in the FTSE 100, insulating it from that downdraft. On top of that, UK stocks have been historically undervalued (the “UK discount”), which may have attracted bargain hunters rotating out of pricier U.S. equities. Technically, the FTSE’s surge took it to ~8900; there isn’t much historical resistance above that since it’s uncharted territory, but 9000 is a nice round number target if momentum returns. On the downside, I’d watch 8500 as a support floor near-term (it was roughly the level of last week’s lows during the wobble). If global markets sour again, a deeper pullback to 8300 (about a 50% retrace of the Q1 rally) could happen, but there’s no sign of that yet. Fundamentally, the UK outlook has a couple of moving parts: commodity prices (key for FTSE), BoE policy, and domestic policy from the new government. Thus far, commodities are holding up, BoE is stable, and the new fiscal plans – while trimming spending – haven’t thrown the market into any panic. One thing to note: UK domestically focused stocks (which are more FTSE 250 than FTSE 100) might feel a pinch from higher taxes or lower government spending, but the FTSE 100 is dominated by global firms which care less about UK domestic demand. So, the FTSE can do well even if the UK economy is only lukewarm. We’ve seen that decoupling historically, and it might continue. I’ll be monitoring UK financials and housing-related stocks for any sign that domestic conditions are biting – but for now, those are behaving. All told, the FTSE’s relative resilience has been a nice positive for UK investors. It’s like the FTSE had its Weetabix while the S&P skipped breakfast. 😉 Outlook: cautiously optimistic. If global sentiment doesn’t deteriorate, the FTSE could make another run at the highs (and beyond). If volatility flares up again globally, the FTSE will of course feel it, but likely less so than the S&P. As a trader, I’m keeping some exposure to UK blue-chips, as they’ve proven their mettle in this storm.

Forex Majors: EUR/USD, GBP/USD, USD/JPY

The FX market in Q1 reflected the shifts in central bank expectations and risk sentiment. Let’s talk about the big FX majors – euro, pound, and yen against the dollar – and how they’re shaping up for the week ahead:

• EUR/USD (Euro – US Dollar): The euro spent much of Q1 quietly strengthening against the dollar. In fact, the US dollar had its worst first quarter since 2008 in broad term, and EUR/USD is currently hovering around 1.08 as we start the week. Part of this move is simple: the Fed is on hold now, and traders see eventual U.S. rate cuts on the horizon (given the growth risks), whereas Europe’s situation is a tad different. Interestingly, the ECB actually cut its main rate by 25 bps in early March (bringing the deposit rate to 2.50% – a dovish turn, yes – but the euro didn’t tank on that because (a) it was somewhat expected as inflation in the Eurozone has come down, and (b) the Fed’s own stance offset it. Also, the Eurozone hasn’t shot itself in the foot with a trade war; if anything, Europe might benefit on the margins (for instance, if U.S.-China trade is disrupted, some investors pivot to Europe or some supply chains shift there). By the end of Q1, we saw Eurozone bonds rally (German Bund yields fell), but not as much as Treasuries, so the interest rate differential moved a bit in the euro’s favor. Moreover, Europe’s economic data has been mixed but not disastrous – unemployment is low and the services sector is holding up, even though manufacturing PMIs are sub-50 (Germany’s manufacturing PMI ~48.3 indicating contraction. The market seems to think Europe might skirt a severe recession (helped by lower gas prices and fiscal support), whereas the U.S. might hit a slowdown patch. All that lends support to the euro. As we head into this week, EUR/USD ~1.08 has a cautiously bullish bias. The trend since the start of the year has been upward (the euro was closer to 1.05 around New Year’s, so it’s ground higher). Key resistance level ahead is 1.10 – a big psychological level and around where the euro topped out in January. A break above 1.10 could open the door to 1.12-1.13 (levels from early 2022). Support on the downside comes in around 1.06 (we bounced from the mid-1.05s in early March). What could move EUR/USD this week? A few things: U.S. data (especially NFP Friday) will drive the USD side; Eurozone data like German Factory Orders (Friday) could nudge the euro if it’s a surprise. Also any chatter from ECB officials – after their rate cut, will they pause further or hint at more easing? I suspect the ECB will strike a balanced tone (they cut because inflation cooled, but they’re not in a hurry to go to zero rates; euro inflation is ~2.5-3% forecast for 2025, a bit above target, so they can’t go crazy easing). In summary, I lean moderately bullish on EUR/USD near-term, given the trend and USD headwinds, but I’m mindful that 1.10 might be a tough nut to crack without a fresh catalyst. If risk sentiment sours (say, due to some geopolitical shock), the dollar could catch a bid and push EUR/USD down. Conversely, if the trade war rhetoric cools or U.S. data disappoints (pushing Fed rate cut bets), EUR/USD could pop higher. For euro traders, it’s a week to watch the tone of risk as much as the data.

• GBP/USD (British Pound – US Dollar): The pound sterling has been quietly firming up as well. We’re now near *1.29 USD per 1 GBP, which is toward the upper end of its post-pandemic range. A year ago, GBP/USD was around 1.26, so sterling has improved year-on-year. What’s driving the pound? A few factors: First, the Bank of England’s stance – by holding rates at 4.5% and not cutting aggressively, the BoE is maintaining a yield advantage for the pound relative to, say, the euro (where rates are now 2.5%. So, the GBP offers higher carry. The BoE has also signaled that while it expects inflation to ease, it’s not assuming rate cuts are imminent, which contrasts with market expectations that the Fed will cut later this year. This relatively hawkish hold supports sterling. Second, the UK’s political clarity post-election (new government with a majority) has reduced some uncertainty. There was a time when talks of hung parliament or instability could weigh on GBP – that’s largely off the table for now, and the focus is on policy. The new government’s inclination to be fiscally responsible (spending cuts, etc. can be a double-edged sword: it may slow the economy a bit (not great for pound in long run), but it also reduces the risk of ballooning deficits or any loss of investor confidence (which is pound positive). So far, markets seem comfortable with UK fiscal plans (gilts have been relatively calm). Third, as with the euro, general dollar softness has lifted GBP. Technically, GBP/USD is approaching a big psychological level at 1.3000. We saw highs around 1.297 in late March, so cable is knocking on that door. If we break through 1.30 convincingly, it could spur another leg higher – perhaps to 1.32–1.34, levels last seen in mid-2022. On the downside, there’s support around 1.27 (recent pullback low) and then stronger support at 1.25 (round number and previous breakout level). This week, UK-specific data is light – we have the UK Construction PMI on Friday (expected 46.5 vs 44.6 prior, still below the 50 mark, but that’s not typically a big market mover for the pound unless it’s way off. So GBP/USD will likely take cues from broader themes: the U.S. data (again, NFP looms large) and overall risk sentiment. If global equities hold up and the dollar stays on its back foot, GBP could continue inching upward. However, one thing to watch: BoE speak or any surprises. The next BoE meeting is still a few weeks away, but any commentary from MPC members about the impact of the new budget or their outlook could influence sterling. Also, given UK inflation is higher than in the US (CPI 3% vs US ~2.8% core PCE, if inflation doesn’t fall as expected in coming months, the BoE might actually hold higher for longer than markets think – which would be GBP positive. But conversely, if UK data suddenly weakens, rate cut speculation could hit GBP. For this week specifically, my eye is on that 1.30 level – will cable finally clear it? As a trader, I might look for a confirmed breakout or, if momentum falters, consider that a near-term double-top and play a short-term pullback. And yes, if we smash through 1.30, I might just celebrate with a proper British cup of tea (or maybe something stronger)!

• USD/JPY (US Dollar – Japanese Yen): Here’s a fascinating one. USD/JPY is trading near ¥150 to the dollar, a level that historically rings alarm bells for Japanese authorities. In late 2022, when USD/JPY first spiked above 150, the Bank of Japan (or Ministry of Finance, to be precise) intervened to prop up the yen. Now we’re right back around that neighborhood. What’s going on? Essentially, the yen has remained weak despite the dollar’s struggles elsewhere. The core reason is the policy divergence: the Bank of Japan (BoJ) remains the dovish outlier in a world where other central banks tightened in recent years. As of now, the BoJ’s short-term interest rate is still negative or near zero, and while they have tweaked their yield curve control (allowing Japanese 10-year yields to rise a bit), Japanese yields are a fraction of those in the US. So the interest rate gap between U.S. and Japan is huge – even if U.S. 10-year yields are ~3.5-3.7% now, Japan’s ~0.5% or so. This makes yen a favored funding currency for carry trades and keeps it under pressure. Also, the bout of risk aversion in Q1 interestingly did not strengthen the yen like it might have in the past; instead, investors flocked to gold and also to the dollar a bit (and perhaps Swiss franc), leaving the yen somewhat sidelined as a safe haven. In fact, at times of U.S. market stress, USD/JPY went up because U.S. yields fell (narrowing the rate gap slightly, which should help yen) but the accompanying drop in oil prices hurt Japan’s trade balance less – actually, scratch that: what likely happened is Japanese investors who had hedged U.S. assets reduced hedges or repatriated money, which can weirdly push USD/JPY up, a known phenomenon. Regardless, here we are around 149-150. Key levels: 150.00 is obviously critical – not just psychologically, but because of potential intervention. Many traders suspect that if USD/JPY surges much beyond 150 (say 152+), the Japanese authorities might step in to sell dollars and buy yen, as they did before. On the downside, if we get any yen strength, initial support is around 148, then 145. In fact, some forecasts at the start of year thought yen would strengthen by now due to a narrowing US-JP rate gap (if Fed cuts and BoJ tweaks policy). That hasn’t materialized yet – Fed hasn’t cut, and BoJ under new Governor Ueda has been ultra-gradual in policy normalization. Will that change? Perhaps later in 2025, BoJ might finally exit negative rates if inflation in Japan holds around 2%. For this week, drivers for USD/JPY will be mostly external: the U.S. jobs data and yields will drive the dollar leg, and any risk sentiment shifts will drive safe-haven flows (or lack thereof) into yen. If Friday’s NFP comes in much weaker than expected, U.S. yields could fall and USD/JPY might dip – we could see a move toward 147-148 in that scenario as markets price in Fed easing. Conversely, if U.S. data is strong and yields pop, USD/JPY could bust through 150 decisively. Also, note that oil prices can indirectly affect USD/JPY – Japan is a huge oil importer, so cheaper oil (as we’ve had lately) actually helps Japan’s trade balance, potentially supportive for yen; expensive oil hurts and can weaken yen. With oil in mid-$70s (not too high), that factor is neutral to slightly yen-supportive. But I’d say policy divergence is the main story. I’ll also be listening for any verbal intervention – Japanese officials sometimes jawbone the market when yen gets too weak, even if they don’t actually intervene. Already last week there were a couple of comments like “we are watching FX moves with a high sense of urgency” from Tokyo – code for “don’t push it too far.” As a trader, shorting USD/JPY at these heights is tempting (because if it reverses, it could be a sharp move), but it’s also dangerous to fight the trend without a catalyst. The safer play might be options or waiting for confirmation of a top. In any case, volatility in USD/JPY could be on the menu if anything surprises. Keep in mind Japan also has some data this week (e.g. Household Spending on Thursday, but BoJ has made clear they’re not hurrying to tighten. So it really comes down to the USD side and any intervention threat. Stay alert on this one – it’s near a potential turning point, but hasn’t turned yet.

Commodities Corner: Gold and Oil

Commodities have seen dramatic moves, providing both opportunity and hedge for traders. Let’s focus on two big ones: gold and oil.

• Gold: Shining bright doesn’t even begin to cover it – gold has been on an absolute tear. It just closed out its best quarter since 1986, up about 18% in Q1. Not only that, gold has surged to all-time record highs, breaking through the $3,000/oz barrier for the first time ever. We hit roughly $3,087 on Friday, March 28th, which is a milestone that even gold bugs might not have expected so soon. To put this in perspective: gold’s previous record high (around $2,075) was left in the dust as the metal gained nearly $500 in a quarter. So what’s fueling this massive rally? Gold is the classic safe-haven asset, and boy did we have a demand for safety. The escalation of Trump’s trade war rhetoric and tariffs, which has rattled equity markets, sent investors scurrying into gold. It’s the same playbook as past risk episodes: when uncertainty rises – be it geopolitical (tariffs, conflict) or economic (recession fears, inflation concerns) – gold benefits. Here we had a bit of all of the above. Another big factor is the weaker dollar; gold often moves inversely to the USD. With the dollar index suffering its worst Q1 in 17 year, that removal of headwind helped gold climb faster. Real interest rates (adjusted for inflation) also fell as nominal yields dropped and inflation expectations rose, which is bullish for a non-yielding asset like gold. We also have central banks (like in China, Russia, Middle East) reportedly buying more gold – partly to diversify reserves away from the dollar (a theme encapsulated by the idea that Trump’s policies could make “America First” turn into “America Alone”, encouraging some reserve managers to up their gold holding. Now, near-term outlook: The momentum is obviously strong. Gold has solidified support above $3,000, turning that round number into a new floor. Technically, traders are eyeing next *resistance levels at $3,125 and $3,177 (these come from extended Fibonacci projections or historical extrapolations – basically new territory targets). If the rally continues this week, those are the figures on the map. I’ll be honest: part of me as a trader is cautious – such a steep climb can invite profit-taking or a pullback. But each dip so far has been shallow as fresh buyers step in. It would likely take a notable shift in narrative to cause a deeper correction (for example, a sudden de-escalation in the trade war or surprisingly strong global data easing recession fears, which could reduce the urgency to hedge in gold). Short of that, sentiment on gold is bullish. In fact, sentiment might be too bullish – one contrarian flag. But as they say, never get in front of a speeding train. I’ll continue to ride the trend but with tighter stops as we go higher. This week, keep an eye on Friday’s U.S. jobs data – a soft NFP could push gold even higher (on expectations of Fed easing and more economic worry), whereas a very strong NFP might cause a knee-jerk dip (as yields/dollar could bounce). Also, any news on the tariff front is crucial: if Trump announces new tariffs (there’s speculation something might come this week, gold could see another spike. Conversely, if there’s some surprise positive development (for instance, talks between U.S. and China restarting), gold might lose a bit of shine in the short term. Volatility in gold is elevated (not as wild as oil, but still notable), so be prepared for quick moves. As for me, I’ve joked that gold’s rise has me considering asking for my next bonus in gold bars instead of cash – it’s been that impressive. Jokes aside, it’s a great hedge in the portfolio given the macro backdrop. We just have to manage the position actively given how far and fast it’s moved.

• Oil (Crude): If gold was a one-way rocket, oil has been more of a yo-yo this past quarter. Prices have whipsawed as traders balance supply vs. demand and juggle geopolitical news. To simplify, in Q1 oil saw rallies on supply concerns (e.g. fears that conflict in the Middle East could disrupt production, or expectations OPEC+ might cut output) and drops on demand concerns (worries that a global slowdown or rising interest rates will curb oil consumption). As of now, Brent crude is trading around the mid-$70s per barrel (roughly $73-75, and WTI (US crude) a few dollars lower. Not long ago, Brent tested lows near $70 and highs in the low $80s, so it’s been range-bound overall, albeit with volatility. One major factor has been the war/conflict in the Middle East: the Israel-Hamas war flared in late 2024 and into early 2025, but there were ceasefires in place that eased immediate fears of a broader Middle East conflagration. However, Reuters reports those ceasefires *already look under threat – an uneasy calm that could break. If violence escalates again (or if tensions with Iran or other regional players mount), we could see oil jump on supply risk fears (even if neither Israel nor Gaza are oil producers, the concern is about regional stability affecting major Gulf oil exporters or shipping lanes). On the other side, the global demand outlook is lukewarm – China’s recovery has been moderate, not a boom; the U.S. and Europe are slowing; so oil demand growth is not exactly roaring. Additionally, we had a relatively mild winter in the northern hemisphere, reducing energy demand a bit. Meanwhile, OPEC+ (led by Saudi and Russia) has been actively managing supply. Late last year they made production cuts to prop up prices. They seem intent on keeping Brent from collapsing much below $70 – that might be an unofficial line in the sand. There’s even talk that if prices slip, OPEC could announce further cuts or extend current ones. Conversely, when oil rallied into the $80s, there’s the concern that too high prices will further hurt demand and also invite more U.S. shale output. It’s a balancing act. So the result is: oil has range traded. Technicals: For Brent, support is around $70 (the low end of the range and a level of prior intervention by OPEC jawboning), and resistance around $80-85 (we’ve seen sellers in that zone, plus it’s where demand concerns intensify). WTI ranges roughly $5 below Brent, so think $65-$80 for WTI. This week, there’s no OPEC meeting (the next full OPEC+ meeting is a little later), but we do have the usual U.S. inventory data on Wednesday (always a short-term mover for oil. Last week’s data showed a draw in crude inventories, which helped support prices a bit. We’ll also be tracking any commentary from OPEC officials – sometimes even a hint that “we will ensure market stability” can lift prices. On the demand side, watch the global PMIs (U.S., China, Europe manufacturing PMIs early week) – these give a sense of industrial demand. Also worth noting: Russia has been exporting a lot of crude despite sanctions (finding buyers in Asia), which has kept supply ample; any change there (due to tighter enforcement of price caps, etc.) could influence supply. And don’t forget the U.S. Strategic Petroleum Reserve (SPR) – the U.S. drew it down a lot last year to fight high gas prices; they’ve said they might refill it when oil is sustainably around $70. That puts a bit of a backstop in as well (as the U.S. could become a buyer at low prices). So, near-term, I expect oil to remain in its choppy trading range unless a big catalyst hits. If I had to guess, I’d say we may see a bit of firmness because $70 held and summer driving season is ahead (demand tends to pick up in Q2). But any sign of recession could quickly knock it down again. For trading oil, it’s been more tactical – buying the dips, selling the rips, with tight stops. Energy stocks similarly have mirrored this up-and-down, which FTSE investors know well (one day BP is up on higher oil, next day down on lower oil). Keep an ear out for any surprising geopolitical headlines; oil reacts in minutes to those. As the old trading adage goes, oil is the widow-maker if you’re caught wrong-footed – so respect your risk, especially when headlines can hit at 3am our time.

The Week Ahead: Key Short-Term Drivers to Watch

Looking to the week of March 31 – April 4, 2025, we have a packed calendar and plenty of potential market catalysts. Here are the key events and drivers I’m watching, which could shape volatility in the days ahead:

• U.S. Manufacturing Data (Monday/Tuesday): On Monday, the U.S. Manufacturing PMI (final March) comes out, and on Tuesday we get the more closely watched ISM Manufacturing PMI. Markets expect ISM around 49.6 (just under the 50 breakeven. Last month it was 50.3, so this would imply a slight contraction in factory activity. If the ISM surprises to the upside (back above 50), it could boost sentiment for industrial stocks and maybe the dollar a bit. A downside miss (lower 40s) would amplify recession worries – potentially weighing on equities (especially cyclicals) and bond yields. Given all the talk of slowing demand, I’ll be checking the new orders and employment sub-indices in that report for clues. As a personal note: lately, bad news has sometimes been “good” for markets (thinking Fed will cut), but with the Fed cautious, really bad news might just be bad. So we’ll see how the market mood is on Tuesday.

• U.S. Jobs Data (Wednesday & Friday): It’s jobs week, folks! Wednesday brings the ADP private employment report (consensus ~118k new job. ADP can be hit-or-miss predicting the official numbers, but traders will still react to it if it’s way off expectations. The crown jewel is Friday’s Non-Farm Payrolls (NFP) report. This is the big one for the week. Current consensus is for the U.S. to have added about 139,000 jobs in March (down from 151k in Feb, and the unemployment rate to hold at 4.1% . Basically, the forecast sees a cooling but still positive job market. If the actual number comes out significantly lower – say close to zero or even negative – brace for impact: we’d likely see a risk-off move initially (stocks down) on fear that the economy is faltering. However, bonds would rally (yields down) and that could revive the “Fed will cut rates” narrative, which might eventually put a floor under stocks and would probably send the dollar lower (and gold higher). Conversely, if we get a blowout jobs report (say 200k+ jobs, unemployment ticking down), the immediate reaction could be fear that the Fed will need to reconsider its pause – that could spike bond yields and pressure equities (especially rate-sensitive tech). It would likely give the dollar a boost (particularly against yen and maybe euro). There’s also the wage growth component: markets have been less sensitive to this lately, but if wage growth accelerates, that’s inflationary, and if it cools, that’s Fed-friendly. In any case, expect some fireworks around 1:30 PM London time on Friday when NFP hits. I’ll be up early, double-checking my positions and likely not holding any overly large unhedged trades into the release – I’ve learned that lesson before (the hard way!).

• UK and Eurozone Data (Friday): Earlier on Friday, the UK Construction PMI is due. It’s a minor one (services PMI is more important for the UK), but noteworthy that construction has been in contraction (last reading 44.6). Forecast is 46. – still below 50, but a bit better. This reflects the housing market and infrastructure activity; continued weakness might hint at higher rates biting into the UK property sector. The market impact of this PMI is usually small on GBP unless it’s a big miss/beat. Over in Europe, we get German Factory Orders for February. Orders last month plunged -7%, and a rebound of +3-4% is expected now. Germany’s manufacturing has been struggling, so a positive surprise could bolster the euro slightly and improve sentiment for EU markets, while a miss would do the opposite. Also, keep an eye on Eurozone flash inflation if any are out (I think some countries’ CPI may trickle in around this time, though the main Euro CPI might have been last week). European inflation coming down has been a theme – further drops could reinforce the ECB’s recent dovish move.

• Central Bank Chatter: While no major central bank meetings are scheduled this week (Fed and BoE are on pause until May), we could hear from policymakers at conferences or in press. In particular, any Fed speakers or BoE MPC members giving interviews could move markets if they hint at changes in stance. For instance, if a Fed official acknowledges the weak data and entertains the idea of cuts, that’d be dovish market fuel. Conversely, if they emphasize inflation fight isn’t won, that’s hawkish. Same for BoE – though I suspect silence as they digest budget changes. Also, watch out for Bank of Japan news – sometimes speculation around BoJ tweaks can jolt USD/JPY. However, BoJ’s next meeting is later, and they likely won’t rock the boat just yet.

• Geopolitics – Trade and Conflict: This is more nebulous but absolutely crucial. We are essentially in a new trade war phase. There’s chatter that Trump may announce a fresh wave of tariffs or trade actions possibly as early as this week – if that happens, and especially if it targets major industries (like tech, autos, or involves Europe/China), expect risk assets to react swiftly. Markets will also be monitoring how China responds; so far, some retaliation has been announced, but nothing too extreme. If tit-for-tat escalates, it could further depress certain stocks and boost safe havens. Aside from trade, keep an eye on the Russia-Ukraine war (it’s not front-page like it was, but it’s ongoing and any major development there – good or bad – can shift European sentiment and commodities). And as discussed, the Middle East ceasefire situation – any deterioration could impact oil and haven flows. We’re also in an era where even a single tweet or offhand comment can move markets. So it’s a good practice to stay plugged into a news feed. (I joke that these days half my trading job is reading Twitter – or “X” as we now call it – and parsing real news from noise. But honestly, it pays to be informed in real time.)

• Market Technicals and Flows: Lastly, a softer factor: We’ve just ended Q1, so some quarter-end rebalancing flows might still reverberate early this week. Some funds that needed to sell stocks/buy bonds (after stocks fell, bonds rose in Q1) may have already done so last week, but if not, Monday could see a bit of that. Additionally, volatility selling often happens if markets calm – now that VIX is sub-20 again, we might see some systematic strategies re-engage and buy equities. On the technical side, as I noted earlier, *S&P 500’s 200-day avg (~5750) is a pivotal level – how the index behaves around it in the first couple of days will set tone. Similarly, VIX around 20 – does it break lower (toward “complacent” teens) or spike back up? And yields: the 10-year U.S. is around 3.5%; a move below 3.4% would indicate bond traders leaning toward slowdown, which could help stocks, whereas a move back to 3.8% would indicate inflation worries back in play. These aren’t scheduled events but are key things I watch daily. Think of it like checking the market’s vital signs.

In summary, it’s going to be an eventful week with no shortage of things to watch. We’ve got critical economic data, the ever-present specter of tariff news, and markets that are trying to find their footing after a roller-coaster quarter. My game plan? Stay flexible and informed. I’ll be looking for trading setups that align with the bigger picture we discussed – e.g., if data comes in weak, maybe lean into those bonds and gold trades; if data is strong, perhaps fade the rally in those and look at oversold cyclicals. And I’ll keep the tone professional but, as always, I remind myself (and you): it’s okay to lighten up and crack a joke to ease the stress – this is a marathon, not a sprint.

Alright, that’s it for this week’s outlook. Keep your risk managed, your eyes on the horizon (and the Bloomberg terminal), and let’s navigate whatever the markets throw at us with confidence. After all, volatility also means opportunity. Here’s to a profitable week ahead – and maybe a bit less drama than the last one (one can hope!).

Cheers,
Samuel Leach

www.samuelandcotrading.com