Chicago Federal Reserve President Austan Goolsbee said on Tuesday that “hard” economic data remained strong, but increased trade tariffs under President Donald Trump presented risks of higher inflation and slowing growth. 

Speaking in an interview on Fox News, Goolsbee said that “in theory,” a one time tariff would only cause a transitory increase in inflation. Imports also account for just 11% of the U.S. economy, which will limit the inflationary impact of tariffs. 

But the prospect of major economies retaliating over Trump’s tariffs could cause a “stepping up” in tariffs, which could underpin inflation. 

“The fear is if it jumps out of the 11% line,” Goolsbee said, warning that tariffs could increase the prices of “intermediate goods” and raise the cost of production for other industries.

He also warned that increased tariffs could see “people start freaking out” and change their spending behaviour.

“If the consumer stops spending, or if a business stops investing, because they’re uncertain or afraid where we’re headed, that would be a bit of a mess,” Goolsbee said. 

The Chicago Fed President noted recent data showing consumer and business sentiment “almost cratering,” but said that hard economic indicators remained strong.

Speculation over Trump’s tariffs ramped up this week ahead of his April 2 deadline to impose more tariffs. Trump has repeatedly touted the date as “liberation day,” and is set to unveil reciprocal tariffs on several major trading partners, as well as potential duties on key industries. 

Underlying economy remains strong, Goolsbee says 

Goolsbee said that hard economic indicators- such as inflation and growth- still showed resilience in the U.S. economy. 

“The hard data is still pretty solid… if we could get past this period of uncertainty, I still think that the underlying strength of the hard data in the economy is still there,” Goolsbee said. 

He noted that the labor market remained strong, and that inflation remained on a path to fall further after easing below 3%. 

But he noted that this contrasted heavily with weak consumer and business sentiment. 

The S&P 500 climbed Tuesday after cutting come losses as tech jumped despite cautious sentiment on risk assets ahead of President Donald Trump’s April 2 tariff announcements.

At 4:00 p.m. ET, the Dow Jones Industrial Average fell 11 points, or 0.03%, the S&P 500 index traded up 0.4%, and the NASDAQ Composite rose 0.9%.

The broad-based S&P 500 lost nearly 5% in the first quarter of 2025, the tech-heavy NASDAQ Composite suffered an over 10% quarterly plunge, while the blue chip Dow Jones Industrial Average lost nearly 2% in the first quarter.

Trump reciprocal tariffs to be impose immediately

President Donald Trump is set to impose reciprocal tariffs on a broad range of trading partners on Apr. 2 that will go into effect immediately on Apr. 2, White House press secretary Karoline Leavitt said on Tuesday. 

Revoking diminish exepctions against China -- allows small packages under 100 to come in duty free. 

"My understanding is that the tariff announcement will come tomorrow. They will be effective immediately,” Leavitt said.

Trump is considering a range of measures that could include a blanket tariff as high as 20%, a tired-tariff measure or a customized country by country basis.

Trump is expected to announce the details of the administration’s reciprocal tariffs at 3:00 p.m. ET.

This initiative, referred to as "Liberation Day," will be followed by a 25% tariff on auto imports starting April 3.

These measures are expected to significantly impact global trade dynamics and have raised concerns about their potential to contribute to recession risks. 

U.S. stock futures were subdued on Tuesday, with investors awaiting President Donald Trump’s much-anticipated unveiling of sweeping new tariffs. Treasury Secretary Scott Bessent says the announcement will come on April 2, while the White House releases a list of foreign countries’ regulations that it considers to be trade barriers. Traders will be keeping an eye out for job openings data later today, and tariff-related uncertainty underpins a rise in gold prices to a record high again.

1. Futures muted

U.S. stock futures hovered around the flatline as the world braces for the announcement on new tariffs by President Trump later this week.

By 03:34 ET (07:34 GMT), the Dow futures contract, S&P 500 futures and Nasdaq 100 futures were all mostly unchanged.

The main indices on Wall Street were mixed at the end of trading on Monday, as markets took a deep breath before Trump is expected to unveil the levies on April 2 -- what he has deemed "Liberation Day."

Trump has argued that the tariffs are necessary to correct imbalances between the U.S. and its foreign trade partners, as well as a tool to bring manufacturing jobs back to the country. However, some economists have warned that the duties will refuel inflationary pressures and weigh on growth, leading to a period of so-called "stagflation."

Jitters over the prospect of the tariffs have dented sentiment among investors, who had initially been hopeful that Trump would usher in pro-growth and business-friendly policies, for much of the first quarter. The benchmark S&P 500 index slipping to its worst first three months of a year since 2022.

2. Bessent on Trump tariff announcement timing

Trump will announce his new round of trade tariffs on April 2 at 15:00 ET (19:00 GMT), Treasury Secretary Scott Bessent said in a Fox News interview on Monday.

“I’m not going to get ahead of President Trump, he’s going to announce them at three o’clock, on Wednesday,” Bessent told Fox News’ Sean Hannity.

“We’re going to see fair trade […] everyone will have an opportunity to lower their tariffs, non-tariff barriers […] and make the global trading system fair for American workers again,” Bessent said.

Bessent’s comments echoed Trump’s view that the U.S. is treated unfairly in global trade. Trump plans to impose tariffs matching those imposed by major trading partners on American goods.

Late on Monday, the White House released a detailed list of foreign countries’ rules that it views as trade barriers, including applied tariff rates and regulations on everything from food safety to renewable energy.

3. JOLTS data ahead

Traders are eyeing a slew of indicators due out this week, as well as a speech from Federal Reserve Chair Jerome Powell on the state of the economy.

Markets will have the chance to parse through the February reading of a measure of job openings later today, which will be the first of a string of labor market data that will culminate with the all-important nonfarm payrolls report on Friday.

The Job Openings and Labor Turnover Survey, or JOLTS report, is seen coming in at 7.690 million on the last day of February, compared with 7.740 million in the previous month.

The figures -- which are considered to be a proxy for labor demand -- come as worries are growing that Trump’s tariffs will trigger an economic slowdown. Analysts at Goldman Sachs have lifted their estimate for the odds of a recession to 35%.

4. Chinese factory activity speeds up

Chinese manufacturing activity grew more than expected to a four-month high in March thanks to a sustained rise in new orders, private Purchasing Managers’ Index (PMI) data showed on Tuesday, although the outlook remained clouded over by Trump’s tariff plans.

The Caixin manufacturing PMI grew 51.2 in March, above expectations of 50.6 and the prior month’s reading of 50.8.

A reading above 50 signals expansion, and March’s increase -- the largest since November -- marks the sixth consecutive month of growth.

Stronger demand and new product launches helped boost new business inflows. Foreign demand also picked up, with companies reporting the fastest increase in export orders in nearly a year, the PMI survey stated.

"The majority of surveyed companies expressed confidence in the near-term economic outlook, although some remained cautious over a potential escalation in global trade tensions," Wang Zhe, senior economist at Caixin Insight said in a statement.

5. Gold hits fresh record high

Gold prices notched a new all-time high in Asian trading on Tuesday, boosted by bullion’s safe-haven appeal as market participants prepared for the upcoming tariff announcements from Trump.

Uncertainty surrounding these trade policies has driven investors towards gold, which is traditionally viewed as a safe-haven asset during times of geopolitical and economic instability. The yellow metal has logged consecutive fresh record highs in the last four sessions.

Elsewhere, Bitcoin rose, steadying somewhat after the world’s biggest cryptocurrency slumped by about 11% in the first quarter, with sentiment frail in the face of Trump’s levies.

Meanwhile, oil prices inched higher after Trump threatened to impose secondary tariffs on Russian crude and attack Iran, though worries that trade tariffs could hit global growth capped gains. The benchmarks settled at five-week highs a day earlier.

(Reuters) - Goldman Sachs raised its 12-month price forecast for Europe’s benchmark STOXX 600 stock index, citing the impact of U.S. President Donald Trump’s tariff plans.

The Wall Street brokerage trimmed its forecast to 570 from 580 earlier, it said in a note on Monday.

Chinese manufacturing activity grew more than expected to a four-month high in March due to a sustained rise in new orders, private Purchasing Managers Index (PMI) data showed on Tuesday. 

The Caixin manufacturing PMI grew 51.2 in March, above expectations of 50.6 and the prior month’s reading of 50.8.

A reading above 50 signals expansion, and March’s increase—its largest since November—marks the sixth consecutive month of growth.

The Caixin data comes days after the government PMI, which showed the manufacturing sector grew more than expected in March.

Stronger demand and new product launches helped boost new business inflows. Foreign demand also picked up, with companies reporting the fastest increase in export orders in nearly a year, the PMI survey stated.

"The majority of surveyed companies expressed confidence in the near-term economic outlook, although some remained cautious over a potential escalation in global trade tensions," Wang Zhe, senior economist at Caixin Insight said in a statement.

Beijing rolled out major stimulus measures in 2024, but China’s economy faces additional pressures from U.S. trade policies under President Donald Trump.

Trump has already imposed 20% additional tariffs on Chinese goods in his second term, with more broad tariffs potentially on the horizon.

"The government has made boosting consumption the top priority of its economic work this year. That means policy efforts should focus on stabilizing employment, alleviating households’ financial burdens, and increasing their disposable income," Wang Zhe added.

Last month, China launched a special action plan to stimulate domestic consumption as part of efforts to drive economic growth.

NEW YORK (Reuters) - The amount in U.S. dollars held as reserve currency globally slipped in the last quarter of 2024 while the percentage of actual dollars held as reserve ticked up, IMF data showed on Monday.

Dollar-equivalent amounts dropped also among holdings in euro, pound sterling, yuan, yen, Swiss franc and Australian and Canadian dollars, with only the latter showing a tick up in the percentage of holdings, the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) data showed.

Reported global holdings of reserves of foreign exchange fell to $12.36 trillion at the end of 2024 from $12.75 trillion at the end of the third quarter of last year. Broken-down reserves, those which identify the single currencies, fell to $11.47 trillion from $11.84 trillion.

The value of the greenback rose 7.7% in the last quarter of 2024 against a basket of peers, lowering the dollar value of reserves kept in other currencies. The dollar index has fallen nearly 4% in the first quarter of this year.

"I don’t expect drastic changes from one COFER report to the other because, why would you? The U.S. remains the most liquid and deep market in the world," said Brad Bechtel, global head of FX at Jefferies in New York.

"The only category that has changed significantly is the allocation to gold, especially in places like China, India, Russia... but the COFER data doesn’t really pick that up."​

The share of holdings in yuan was unchanged at 2.18% and yen was little changed at 5.82% from 5.83%.

By David French

(Reuters) -The S&P 500 and the Nasdaq Composite posted on Monday their worst quarterly performances since 2022, as uncertainty around the Trump administration’s economic agenda roiled U.S. equity markets in the first quarter of 2025.

The two benchmarks also suffered heavily in March, recording their biggest monthly percentage drops since December 2022, as President Donald Trump rolled out a swathe of new tariffs which raised fears of a global trade war that would hurt economic growth and spur inflation.

For the quarter, the S&P 500 slumped 4.6%, while the Nasdaq Composite plummeted 10.5%. The Dow Jones Industrial Average was not immune to the unease, slipping 1.3% in the opening three months.

"Investors, more or less in this first quarter, threw their hands in the air, as you really cannot trade around this," said Adam Turnquist, chief technical strategist for LPL Financial (NASDAQ:LPLA).

The Magnificent Seven technology names, which drove markets higher over a bull market which stretched through 2023 and 2024, weighed heavily on U.S. equity markets as investors sold off growth names.

Tesla (NASDAQ:TSLA) was down almost 36% in the first quarter, and Nvidia (NASDAQ:NVDA) dropped nearly 20%.

"Our big lesson from the first quarter is diversification is not dead," said Michael Reynolds, vice president of investment strategy at Glenmede.

"Whether you’re looking between, or within, asset classes, if you avoided the perils of market concentration, you actually held up quite a bit better versus some of the headline indexes."

While information technology and consumer discretionary - both sectors with heavy influence from big-tech names - posted double-digit percentage declines for the quarter, a majority of the 11 S&P sectors were higher in the same period, led by energy’s 9.3% increase.

On Monday, both the S&P 500 and the Dow temporarily shook off the uncertainty around the Trump administration’s upcoming tariff plans, which are expected to be outlined in greater detail on Wednesday.

Trump said on Sunday that expected tariffs he is set to announce will include all nations. He has already imposed tariffs on aluminum, steel and autos, along with increased tariffs on goods from China.

The S&P 500 gained 30.91 points, or 0.55%, to 5,611.85 points, and the Dow Jones Industrial Average rose 417.86 points, or 1%, to 42,001.76. The Nasdaq Composite lost 23.70 points, or 0.14%, to 17,299.29. The

Financial stocks helped boost the S&P 500 on Monday. Both Discover Financial Services (NYSE:DFS) and Capital One Financial (NYSE:COF) advanced, up 7.5% and 3.3% respectively, as investors bet their merger would ultimately be approved by regulators.

The S&P 500 consumer staples index, often considered a safe haven within stock markets, was the leading sector though with its 1.6% increase. Energy also rose, tracking a jump in crude prices.

The CBOE Volatility Index, Wall Street’s so-called fear gauge, jumped to a two-week high at 22.28 points.

As a result of tariff uncertainties, Goldman Sachs raised the probability of a U.S. recession to 35% from 20%, cut its year-end target for the S&P 500 to 5,700, and forecast more interest rate cuts by the Federal Reserve.

Focus this week will also be on economic data, including ISM business activity surveys and the crucial non-farm payrolls report. Also due this week are speeches from several U.S. central bank officials, including Fed Chair Jerome Powell.

Drugmakers’ shares slid after reports the U.S. Food and Drug Administration’s top vaccine official had been forced to resign. Moderna (NASDAQ:MRNA) dropped 8.9%.

Gene therapy companies Taysha Gene Therapies and Solid Biosciences (NASDAQ:SLDB) fell 28% and 14.4%, respectively.

In deals news, Rocket Companies was down 7.4% after the mortgage lender said it agreed to a $9.4 billion acquisition of Mr. Cooper Group. The announcement, though, sent the mortgage servicer’s stock up 14.5%.

(Reuters) -Goldman Sachs forecast the U.S. Federal Reserve to deliver three quarter point interest rate cuts this year and expects heightened recession risks amid tariff uncertainty, ahead of clarity on President Donald Trump’s reciprocal tariff plan.

The Wall Street brokereage now sees consecutive cuts in July, September, and November, compared to its previous forecast of two cuts in June and December, it said in a note on Sunday.

It anticipates a 15 percentage point increase in tariff rates, a scenario previously considered a "risk-case" but now seems more probable with Trump’s upcoming reciprocal tariff announcement on Wednesday.

The brokerage says the comments from White House officials suggest there is tolerance for short-term economic weakness to achieve their policy goals.

It now sees a 12-month recession probability of 35%, compared to its previous estimate of 20%.

The Fed maintained its benchmark interest rate at 4.25-4.50% in March, with Chair Jerome Powell noting "unusually elevated" uncertainty and challenges in economic projections due to recent policy changes by the Trump administration.

The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred price gauge, increased 0.3% in February after advancing by an unrevised 0.3% in January, data showed on Friday.

Goldman Sachs also lowered its fourth-quarter gross domestic product, or GDP, growth forecast to 1.0% and raised its year-end unemployment rate forecast to 4.5%.

"We continue to believe the risk from April 2 tariffs is greater than many market participants have previously assumed," it added.

By Anushree Mukherjee

(Reuters) - Gold touched an all-time high on Monday, breaching the $3,100 level, as investors turned to the safe-haven asset amid concerns that U.S. President Donald Trump’s tariff plans would stoke a global trade war and economic fallout.

Spot gold was up 0.6% to $3,103.63 an ounce, as of 0255 GMT, after hitting a record high of $3,107.26 earlier. Bullion is up over 8% in March.

The dollar index eased 0.2%, making dollar-priced gold less expensive for buyers holding other currencies.

"Markets anxiety levels have been ramping up ahead of the reciprocal U.S. tariff announcements, which is keeping gold in high demand as a defensive play," KCM Trade chief market analyst, Tim Waterer said.

"If the tariff announcements this week are not as severe as feared, then the gold price could start to backtrack as profit-taking from the highs may be triggered."

Trump is expected to announce reciprocal tariffs on April 2, while auto tariffs will commence on April 3.

Further widening the global trade war concerns, Trump said on Sunday he was "pissed off" at Russian President Vladimir Putin and will impose secondary tariffs of 25% to 50% on buyers of Russian oil if he feels Moscow is blocking his efforts to end the war in Ukraine.

Gold, traditionally seen as a hedge against political and economic uncertainty, has risen over 18% this year. Bullion’s rally has prompted multiple banks to increase their 2025 gold price forecasts.

Meanwhile, San Francisco Federal Reserve Bank President Mary Daly said inflation data published on Friday confirms her decreased confidence in her baseline expectation that two interest rate cuts this year are a "reasonable" projection.

Spot silver rose 0.4% to $34.23 an ounce, platinum was steady at $983.51 and palladium gained 0.4% to $975.70. All three metals are set for a monthly rise.

By Joe Cash and Ethan Wang

BEIJING (Reuters) -China’s manufacturing activity expanded at the fastest pace in a year in March, a factory survey showed on Monday, with new orders boosting production, giving the world’s No.2 economy some reprieve as it deals with an intensifying U.S. trade war.

The reading should reassure officials that further fiscal support launched this year is bolstering the $18 trillion economy, which is also benefiting from foreign buyers frontloading purchases in anticipation of further U.S. trade curbs.

U.S. President Donald Trump is set to announce new "reciprocal" tariffs on Wednesday to tackle perceived trade imbalances, potentially adding more levies on Chinese goods.

Trump has already imposed a cumulative 20% tariff on all Chinese imports since returning to the White House in January, accusing Beijing of not doing enough to curb the flow of chemicals used to make the deadly drug fentanyl into the U.S.

The official purchasing managers’ index (PMI) rose to 50.5 in March from 50.2 a month prior, the highest reading since March 2024 and matching analysts’ forecasts in a Reuters poll.

The non-manufacturing PMI, which includes services and construction, accelerated to 50.8 from 50.4.

"The official PMIs suggest that infrastructure spending is ramping up again and that exports have so far remained resilient in the face of U.S. tariffs," said Julian Evans-Pritchard, head of China economics at Capital Economics.

"But the surveys are still consistent with slower GDP growth in Q1 amid weakness in the service sector," he added.

China has kept its economic target for this year unchanged at "around 5%" despite Trump’s tariff threats, which could call time on a largely export-led recovery underway since the end of the COVID-19 pandemic in late 2022.

The government has pledged more fiscal stimulus, increased debt issuance, further monetary easing and put even greater emphasis on boosting domestic demand to cushion the impact of the trade war.

China’s economy has had a bumpy start this year, with nascent improvement in retail sales offset by persistent deflationary pressures and rising unemployment.

Trying to assuage concerns among foreign enterprises over China’s economy amid Trump’s tariff threats, Chinese President Xi Jinping gathered a group of multinational CEOs last week and urged them to protect global industry and supply chains.

At a key business forum earlier this month in Beijing, Chinese Premier Li Qiang urged countries to open their markets to combat "rising instability and uncertainty."

Beijing is also doubling down on its "cash for clunkers" consumer goods trade-in programme to encourage households to open up their wallets.

Analysts polled by Reuters forecast the private sector Caixin PMI to have risen to 51.1. The data will be released on April 1.