36. Weekly Market Recap: Key Movements & Insights

Fed’s Rate Cut Hopes Dashed: Markets Brace for “Higher for Longer” 📉

Trade War Escalation and Fed Pessimism Keep Markets on Edge

This week, markets swung between gains and losses as investors digested a mix of corporate earnings, trade war developments, and Federal Reserve commentary. On Tuesday, Fed Chair Jerome Powell dampened hopes for imminent rate cuts, stating at an event on the Canadian economy that there has been a "lack of further progress so far this year on returning to our 2% inflation goal." His remarks dashed optimism that the Fed would ease its monetary policy anytime soon, leaving traders bracing for a prolonged "higher for longer" rate environment.

According to Polymarket, traders are now betting nearly 100% on the Fed holding rates steady at its May policy meeting, with no rate cuts expected until September. This shift in sentiment is a stark reversal from earlier in the year, when many anticipated multiple rate cuts. Bond markets reflected this uncertainty, with the benchmark 10-year Treasury yield falling to approximately 4.64% on Wed…