Treasury Secretary Scott Bessent’s comments on an expected de-escalation in the US-China tariff standoff, coupled with President Donald Trump’s confirmation that he will not seek to remove Federal Reserve Chair Jerome Powell, have injected a dose of stability into markets reeling from recent turbulence.
Meanwhile, equity markets, particularly in the US, Hong Kong, and Japan, have rallied on hopes of trade resolutions, with standout performances from companies like Tesla. In the foreign exchange markets, the US dollar has staged a rebound, while commodities like gold have pulled back from record highs, and the fixed-income market shows signs of a flattening yield curve.
These developments, set against the International Monetary Fund’s (IMF) warnings of slowing global growth due to US tariffs, paint a picture of an interconnected world navigating uncertainty with cautious hope. Below, I offer my perspective on these macroeconomic, equity, currency, commodity, and fixed-income trends, grounded in the latest data and market signals.
As articulated by Bessent, the prospect of de-escalating US-China trade tensions is a pivotal development that could reshape global markets. Bessent’s assertion that the current tariff standoff—marked by US tariffs on Chinese goods at 145 per cent and China’s retaliatory duties at 125 per cent—is “unsustainable” reflects a pragmatic recognition of the economic toll on both nations. His comments at a closed-door JPMorgan Chase investor summit sparked a 2.5 per cent surge in the S&P 500, signalling market relief at the possibility of reduced trade frictions.
However, skepticism from sources like Fox Business Network’s Charles Gasparino, who suggested Bessent’s optimism may be overstated, underscores the challenges ahead. As Bessent noted, negotiations with China are likely to be a “slog,” with no formal talks yet underway. The US-China trade war has already disrupted global supply chains, fuelled inflation, and contributed to the IMF’s downward revision of global growth to 2.8 per cent for 2024 and US growth to 1.8 per cent for 2025.
A de-escalation could alleviate some of these pressures, but the path forward is complex. China’s vow to “fight until the end” and its recent 84 per cent tariffs on US goods suggest a hardline stance, though Bessent argues China holds a “losing hand” due to its export-heavy reliance on the US market.
I am cautiously optimistic: while both sides have incentives to negotiate—China to protect its export-driven economy and the US to curb inflation and market volatility—the entrenched positions and domestic political pressures on both leaders could delay meaningful progress. As noted by Politico, the White House’s reported progress on trade deals with Japan and India offers a potential blueprint for bilateral resolutions that could ease global trade tensions if applied to China.
Trump’s decision to retain Federal Reserve Chair Jerome Powell is a stabilising force for markets, particularly after months of public criticism from the president. Trump’s earlier calls for Powell to cut interest rates aggressively, including a social media post demanding, “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS,” had raised fears of political interference in monetary policy.
His confirmation that he has “no intention of firing” Powell, reported by Reuters, has calmed investor concerns about central bank independence, a cornerstone of US economic stability. Powell’s tenure has been marked by a cautious approach to inflation, which recently fell to 2.4 per cent in March 2025, below expectations of 2.6 per cent. This data, combined with Trump’s softened rhetoric, suggests the Federal Reserve can continue its data-driven approach without the spectre of political upheaval.
However, the IMF’s warning that US tariffs could reignite inflationary pressures complicates the Fed’s path. My take is that Powell’s retention is a net positive for markets, as it preserves institutional continuity and reduces the risk of abrupt policy shifts. Yet, Trump’s ongoing pressure for lower rates could create friction, especially if tariff-induced inflation forces the Fed to maintain or raise rates, potentially clashing with the administration’s growth agenda.
The US has seen a robust rebound in the equity markets, driven by optimism over trade negotiations and Bessent’s comments. The S&P 500’s 2.5 per cent climb, the Nasdaq 100’s 2.6 per cent rise, and the Dow’s 1,000-point gain reflect a market eager for positive signals amid recent volatility. The Cboe VIX Index, a measure of market fear, remains elevated at 31, indicating lingering uncertainty, but the rally suggests investors are betting on a softer US trade stance.
Tesla’s five per cent stock surge, fueled by renewed confidence in CEO Elon Musk’s focus on the company, is a standout. As a business leader and a vocal supporter of Trump’s policies, Musk’s influence has amplified Tesla’s market narrative, particularly as tariffs on Chinese electric vehicles could bolster domestic producers. In Hong Kong, the Hang Seng Index’s 0.8 per cent rise to 21,562, supported by China’s “national team” and retail investors, reflects resilience despite tariff pressures.
Japan’s Nikkei 225 and Topix indices, up over two per cent have been buoyed by Wall Street’s rebound and signals of easing US-China tensions and Japan’s private sector growth. In my opinion, these equity gains are fragile, hinging on the success of trade negotiations.
The IMF’s downgraded growth forecasts for the US, Mexico, China, and the Eurozone serve as a reminder that tariffs have already inflicted economic damage, and any misstep in diplomacy could reverse these gains. Investors should remain vigilant, as the market’s optimism may outpace the reality of protracted trade talks.
The foreign exchange market has seen a notable rebound in the US dollar, with the DXY index nearing 99.5, while the euro has slipped below 1.14. This dollar strength is likely driven by renewed confidence in US economic stability following Trump’s Powell decision and Bessent’s de-escalation comments. The dollar’s earlier 5.8 per cent decline in 2025, as reported by Reuters, reflected fears that tariffs would undermine US growth. Still, the rally suggests markets are reassessing the US as a relative safe haven.
The euro’s weakness, meanwhile, stems from the Eurozone’s exposure to US tariffs and internal divisions over retaliation strategies, with countries like France advocating for aggressive countermeasures and others, like Ireland, favouring restraint. The dollar’s rebound is temporary, as tariff-related uncertainties and global growth concerns could cap its upside. The euro’s decline may persist if the European Union fails to present a unified front, but a successful negotiation with the US could stabilise the currency.
In commodities, gold’s retreat from a record high of US$3,500, as reported by Reuters, reflects a shift away from safe-haven assets as trade tensions ease. Gold’s 1.5 per cent decline on April 22, 2025, aligns with the equity market’s rally and the dollar’s strength, though its earlier surge to US$3,167.50 amid tariff fears underscores its role as a hedge against uncertainty.
Canada’s industrial producer prices, up 0.5 per cent in March 2025, driven by non-ferrous metals and wood products, highlight commodity-specific dynamics, though falling energy prices, particularly diesel, signal demand concerns. Gold’s pullback is a healthy correction, but its long-term trajectory remains upward given persistent geopolitical risks and inflationary pressures from tariffs. Investors should monitor commodity trends closely, as they offer insights into global demand and trade dynamics.
The fixed-income market’s flattening yield curve, particularly around the stable 5-year sector, is a critical signal of market expectations. The 10-year Treasury yield’s slight easing to 4.3949 per cent, as reported by Reuters, reflects concerns about slower growth, though tariff-induced inflation fears drove earlier spikes to 4.06 per cent.
A flattening yield curve often precedes economic slowdowns, and the IMF’s growth warnings reinforce this narrative. The current yield curve reflects a market grappling with mixed signals: optimism about trade de-escalation versus fears of tariff-driven inflation and recession. Fixed-income investors should remain cautious, as the Fed’s next moves will hinge on inflation data and trade outcomes.
Cryptocurrencies, meanwhile, have mirrored equity market optimism, with Bitcoin hovering around US$92,800 after a 9.75 per cent rally, eyeing a US$95,000 target. Ethereum’s 11.19 per cent surge to US$1,780 and Ripple’s recovery suggest a broader risk-on sentiment.
The Relative Strength Index (RSI) for both Bitcoin (65) and Ethereum (54) indicates bullish momentum, but potential support levels at US$85,000 for Bitcoin and US$1,700 for Ethereum warrant caution. I think crypto’s rally is tied to broader market dynamics, particularly the dollar’s movements and trade optimism, but its volatility demands careful risk management.
In conclusion, the global economy stands at a crossroads, with Bessent’s de-escalation hopes and Trump’s Powell decision offering a reprieve from recent turmoil. Equity markets, currencies, commodities, and fixed-income trends reflect a delicate balance of optimism and caution. While markets have rallied on positive signals, the IMF’s growth warnings and the complexity of US-China negotiations suggest that volatility will persist.
My outlook is guarded optimism: progress on trade and monetary policy stability could pave the way for recovery, but investors must brace for bumps along the road. The interplay of these factors will shape the economic narrative for the remainder of 2025, and staying informed will be key to navigating this dynamic landscape.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
