Weekly Macro Outlook | March 17–24, 2025: Markets Brace for Key US Inflation & Growth Data

Over the past week, global markets have been influenced by central banks’ cautious stances amid persistent inflation and slowing growth. In the United States, investors are delving into unconventional economic indicators to gauge the economy’s health. The United Kingdom’s services sector showed unexpected growth, providing some optimism ahead of the Spring Statement. The Eurozone’s economy expanded at its fastest pace in seven months, driven by manufacturing improvements. Meanwhile, the Bank of England held interest rates steady, signaling no immediate rate cuts due to ongoing economic uncertainties.

United States

Previous Week:

• Investor Behavior: Amid growing concerns over the U.S. economy, investors are increasingly analyzing a broader spectrum of economic data beyond traditional metrics. This includes monitoring spending in bars and restaurants, job postings on private employment sites, auto-loan application rates, credit-card spending, and sales at diamond jewelers. Such scrutiny aims to detect any signs that recent trade restrictions and policies might be impacting economic growth. This heightened sensitivity has led to significant market movements in response to new data releases. ​
• Economic Indicators: Investors will focus on key data releases, including inflation figures and consumer sentiment indices. The Federal Reserve’s outlook and any indications of future monetary policy adjustments will be closely monitored, especially in light of ongoing trade policy developments.​

United Kingdom

• Services Sector Growth: The UK’s private sector, primarily driven by services, experienced stronger-than-expected growth in March. The UK S&P Composite Purchasing Managers’ Index rose to 52, its highest in six months, indicating expansion. The services PMI reached a seven-month high of 53.2. However, manufacturing faced challenges, with its PMI declining to a 17-month low, influenced by global economic uncertainties and potential US tariffs.
• Spring Statement: Chancellor Rachel Reeves is set to deliver the Spring Statement, addressing stability, potential cuts to welfare, and slightly reduced departmental spending. The Office for Budget Responsibility is expected to downgrade growth estimates substantially, possibly halving the projected figure. Higher-than-expected interest rates will increase the cost of government debt, affecting the budget.

Eurozone

• Economic Expansion: In March, the Eurozone’s business activity grew at its fastest pace in seven months, driven by improvements in manufacturing despite slower growth in services. The Composite PMI preliminary reading rose to 50.4 from February’s 50.2, signaling growth in the region. Manufacturing broke nearly three years of contraction, with its main PMI reaching a two-year high of 48.7. Additionally, the factory output index showed expansion for the first time in two years, reaching 50.7.
• ECB Monitoring: The European Central Bank is anticipated to hold interest rates steady due to inflation concerns and tariff risks. Investors await business activity survey data, with expectations of slight expansion.​

Emerging Markets (EMEA)

• Indian Rupee Performance: In India, the rupee experienced its strongest weekly performance in two years, appreciating by 1.2% due to dollar inflows and the unwinding of short positions. Bond yields fell, influenced by strong state debt demand and expectations of another Reserve Bank of India rate cut in April.
• Currency and Bond Outlook: The Indian rupee’s performance will depend on ongoing dollar inflows and the Reserve Bank of India’s actions regarding currency strengthening. Bond yields are predicted to continue declining, with key events including India’s March PMI data and several U.S. economic indicators.​

Commodities and Cryptocurrencies

• Oil: Prices experienced volatility amid geopolitical tensions and trade policy developments.​
• Gold: Prices fluctuated as investors weighed inflation concerns against central banks’ cautious stances.​
• Cryptocurrencies: Major digital assets saw mixed performance, with Bitcoin experiencing slight gains amid broader market uncertainty.​
• Market Drivers: Investors will monitor geopolitical developments and central bank communications for their potential impact on commodity prices. In the cryptocurrency market, regulatory news and technological advancements may influence asset valuations.​

Weekly Macroeconomic Analysis: March 17–24, 2025

Over the past week, global financial markets have been influenced by a mix of economic data releases, central bank decisions, and geopolitical developments. In the United States, investors are closely monitoring upcoming economic indicators, including the Personal Consumption Expenditures (PCE) price index and Gross Domestic Product (GDP) figures, to assess the trajectory of inflation and economic growth. Internationally, markets are reacting to trade policy adjustments and political events, contributing to a complex investment landscape.​

United States

Previous Week:

• Economic Indicators: Investors are keenly awaiting the release of the February PCE price index and the first-quarter GDP figures. The PCE index, the Federal Reserve’s preferred measure of inflation, is scheduled for release on March 28, 2025. Market expectations suggest a 0.3% increase in core PCE for February. The advance estimate for Q1 GDP is also anticipated, with White House economic adviser Kevin Hassett projecting growth between 2% and 2.5%. ​
• Market Performance: The S&P 500 experienced a 4.5% decline, reflecting investor caution amid economic uncertainties.

Upcoming Week:

• Data Releases: The forthcoming PCE and GDP reports will be pivotal in shaping market expectations regarding the Federal Reserve’s monetary policy. Investors will analyze these figures to gauge the potential for interest rate adjustments in response to inflation trends and economic growth.​

International Markets

• Canada: The S&P/TSX futures rose by 0.7% amid reports suggesting a more moderate approach to U.S. tariffs, providing some relief to markets. ​
• Emerging Markets: Countries such as Turkey, Indonesia, and Colombia are grappling with political and economic instability, affecting investor sentiment and capital flows.

Commodities and Cryptocurrencies

• Oil: Prices fluctuated due to geopolitical tensions and trade policy developments, with U.S. sanctions on Iran and Russia-Ukraine ceasefire talks influencing the market. ​
• Gold: Prices remained stable as investors weighed inflation concerns against central banks’ cautious stances.​
• Cryptocurrencies: Bitcoin experienced a 3.47% increase, reaching $87,713, while Ethereum rose by 4.03% to $2,095, reflecting renewed investor interest in digital assets.​

Upcoming Week:

• Market Drivers: Investors will monitor geopolitical developments and central bank communications for their potential impact on commodity prices. In the cryptocurrency market, regulatory news and technological advancements may influence asset valuations.​

Note: The financial markets are dynamic, and the information provided reflects the latest available data as of March 24, 2025. Investors should stay informed of ongoing developments and consult financial advisors when making investment decisions.

United Kingdom

Previous Week:

• Fiscal Outlook: The UK is bracing for significant fiscal challenges, with the government considering austerity measures to address budgetary constraints. The Bank of England has maintained its key interest rate at 4.5%, expressing concerns over persistent inflation and slowing economic growth. ​

Upcoming Week:

• Spring Statement: Chancellor Rachel Reeves is set to deliver the Spring Statement, which may include measures for stricter government spending or increased tax revenue due to a worsened economic outlook. The Office for Budget Responsibility’s revised forecasts indicate that previous fiscal buffers have been eroded, necessitating potential policy adjustments.​

Eurozone

Previous Week:

• ECB Stance: The European Central Bank (ECB) is anticipated to hold interest rates steady due to inflation concerns and tariff risks. In Germany, the parliament’s fiscal stimulus package has spurred some optimism, aiming to counteract slowing economic growth.​

Upcoming Week:

• Business Activity Data: Investors await business activity survey data, with expectations of slight expansion. The ECB’s stance on interest rates and any indications of future monetary policy adjustments will be closely monitored, especially in light of ongoing trade tensions and their potential impact on the Eurozone economy.​

China

Previous Week:

• Diplomatic Engagements: Republican Senator Steve Daines visited Beijing to meet with China’s Premier Li Qiang, laying the groundwork for a potential summit between President Trump and President Xi Jinping. Discussions addressed concerns over China’s role in the fentanyl crisis and trade tensions.

Upcoming Week:

• Policy Focus: Chinese policymakers are expected to focus on implementing measures to boost domestic consumption and attract foreign investment. Analysts predict that greater stimulus efforts might be necessary if trade tensions with the U.S. escalate further.​

Japan

Previous Week:

• BOJ’s Policy Outlook: The Bank of Japan emphasized the importance of being vigilant about food-driven inflationary pressures during its recent meeting. This suggests that interest rates could be raised sooner than initially expected, despite uncertainties introduced by trade policies. ​

Upcoming Week:

• Data Releases: Market participants will monitor upcoming economic data releases, including inflation reports, to assess the sustainability of Japan’s economic recovery and potential implications for monetary policy.​

Emerging Markets (EMEA)

Previous Week:

• Indian Rupee Performance: In India, the rupee experienced its strongest weekly performance in two years, appreciating by 1.2% due to dollar inflows and the unwinding of short positions. Bond yields fell, influenced by strong state debt demand and expectations of another Reserve Bank of India rate cut in April.

Upcoming Week:

• Currency and Bond Outlook: The Indian rupee’s performance will depend on ongoing dollar inflows and the Reserve Bank of India’s actions regarding currency strengthening. Bond yields are predicted to continue declining, with key events including India’s March PMI data and several U.S. economic indicators.​

Commodities and Cryptocurrencies

Previous Week:

• Oil: Prices experienced volatility amid geopolitical tensions and trade policy developments.​
• Gold: Prices fluctuated as investors weighed inflation concerns against central banks’ cautious stances.​
• Cryptocurrencies: Bitcoin experienced a 3.47% increase, reaching $87,713, while Ethereum rose by 4.03% to $2,095, reflecting renewed investor interest in digital assets.​

Upcoming Week:

• Market Drivers: Investors will monitor geopolitical developments and central bank communications for their potential impact on commodity prices. In the cryptocurrency market, regulatory news and technological advancements may influence asset valuations.