Weekly Edge: 28 April to 2 May

Risk-on: trading the Trump pivot, bond-vigilante steepener and a contrarian breadth thrust

Economic Data Recap

United States

• Durable-goods orders leapt 9.2 % m/m in March (core flat), triple the 2 % consensus and the third monthly rise, thanks almost entirely to transportation equipment.

• Building permits edged up to 1.467 million a.r. after three monthly declines, but still fell short of the 1.482 million forecast, signaling only tentative momentum in residential construction.

• Existing-home sales slumped 5.6 % to a six-month low of 4.02 million, undershooting expectations of 4.13 million and confirming the housing cool-down).

• University of Michigan consumer sentiment (final) dropped to 52.2 (57.0 Mar) – the weakest since mid-2022 but still above the 50.8 flash estimate, with inflation worries prominent.

TLDR: Manufacturing demand looks sturdy, yet housing and sentiment show higher rates and tariff uncertainty are biting ahead of this week’s GDP/PCE prints.

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Euro Area & Germany

• Euro-area flash PMIs: manufacturing crept up to 48.7 but stayed in contraction, while services slipped back below 50 to 49.7 – a five-month low.

• Germany – HCOB manufacturing PMI ticked down to 48.0 (47.6 exp.) and the Ifo business-climate index rose to 86.9, beating the 85.2 consensus; firms see slightly better current conditions despite gloomier expectations.

TLDR: The hoped-for industrial rebound remains elusive, but modestly better business sentiment hints the worst of the German downturn may be passing.

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United Kingdom

• Flash PMIs: manufacturing stuck at 44.0 and services fell into contraction at 48.9 (51.3 exp.), pulling the composite to a 29-month low of 48.2.

• Retail sales (Mar.) surprised to the upside, +0.4 % m/m versus –0.4 % consensus, helped by mild weather.

• GfK consumer confidence index slipped four points to –23, the weakest since late 2023 and below forecasts of –22.

TLDR: A soft private-sector PMI and sliding confidence point to a slowing economy, even as headline retail spending shows pockets of resilience.

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Market Moving Narratives

Sudden White-House climb-down.

After days of threatening to sack Fed Chair Jerome Powell and waving a 145 % tariff club at China, President Trump abruptly pivoted. The Oval Office declared it had “no intention” of firing Powell, and headline China levies were cut to roughly 60 %. Customs officials simultaneously carved out exemptions for smartphones, chips and autos. Stocks and the dollar surged, gold slipped and crude retreated as traders priced out the worst-case policy-error scenario. ​

A bond-market “kerfuffle” and the return of the Vigilantes.

Even with cooler CPI/PPI prints, 10-year Treasury yields punched through 4.7 %, steepening the curve and draining liquidity. Jamie Dimon warned that regulation-clogged markets could “panic” before the Fed steps in. Treasury Secretary Scott Bessent kept long-bond issuance on a tight leash and hinted at yield-curve control by stealth, while foreign buyers crowded into short-dated bills. The rate volatility bled into equities and credit spreads all week. ​

Death Cross vs. Zweig Breadth Thrust – the chart duel.

Technicians were whipsawed by two diametrically opposed signals flashing almost together. The S&P 500 and Nasdaq 100 registered a textbook Death Cross (50-day moving average below the 200-day), historically bearish. Yet the market also triggered a rare bullish Zweig Breadth Thrust—advancing-stock breadth rocketing from sub-40 % to above 61.5 % inside ten sessions. The standoff kept volatility high and encouraged short-horizon swing-trading rather than committed positioning. ​

China weaponises rare-earths, stoking a Taiwan premium.

Beijing abruptly slapped export controls on seven rare-earth elements vital to defence and EV supply chains, just as Washington floated a $1 trn Pentagon budget. The S&P 500 Aerospace & Defence index fell nearly 6 % from late-March highs and gold found support as investors dusted off Taiwan-risk hedges. ​

“Too many bears” light a contrarian fuse.

Three straight Economist doom covers, record AAII pessimism and widening credit spreads produced what Ed Yardeni dubbed the “strongest buy signal ever.” From its 8 April low the S&P 500 has bounced more than 7 %, while the VIX slipped below 28, suggesting a tactical bottom even as macro headlines stayed ugly. ​

Bottom line: policy whiplash, bond-market angst, contradictory technicals, geopolitical surprises and extreme sentiment combined to keep asset prices range-bound but jumpy. Navigating this tape meant reacting faster than the next headline—until the next pivot arrives.

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Momentum Analysis

Markets are acting as if the “Trump pivot” removed the tail-risk of a policy accident but did not remove the drag on real-economy growth.

FX – a soft-dollar, pro-risk skew

• GBP (+3.4 % 1-day) and EUR (+3.1 %) lead the G-10 pack, extending their post-pivot rallies.

• AUD is green intraday but flat on a one-day look-back, signaling that the China-exposed commodity bloc is still wary.

• JPY’s negative 1-hour score (-1.2) tells us higher U.S. yields are pinning the yen down even as the dollar slips elsewhere.

Read-through: Capital is rotating toward higher-beta FX on the view that the Fed will stay put while foreign central banks ease, but there is no wholesale dash for growth-sensitive Asia-Pac names.

Rates – front-end bid, long end offered

• Momentum in 2- and 10-year Treasuries is positive on every timeframe; the 30-year flips negative on the 1-day window.

• That pattern matches last week’s “bond-vigilante kerfuffle”: the curve is steepening as traders fade a near-term recession but continue to demand a premium for long-run inflation and supply risk.

Read-through: The market is settling into a bear-steepening regime—rate-cut hopes at the front, structural worries at the long end.

Equities – duration beats cyclicality

• Nasdaq (+4.3 % 1 h, +1.6 % 4 h) and S&P 500 (+3.4 % / +1.0 %) are the short-term leaders, echoing the Zweig Breadth Thrust and “too-many-bears” contrarian squeeze.

• Russell 2000 momentum is already negative on a 1-day basis (-0.9) and barely positive intraday, underscoring how higher real rates and tariff noise still bite domestically focused small caps.

• Dow prints red on the 4-hour and 1-day horizons.

Read-through: Traders are favouring long-duration, cash-rich tech over cyclicals—classic “late-cycle risk-on”.

Commodities – defence, not demand

• Gold shows accelerating strength (1-h +1.5, 1-day +3.9) as central-bank buying and tariff-hedging trump the softer dollar.

• Copper is modestly positive, but crude oil is the standout laggard (1-day -1.8) after the White-House tariff de-escalation and OPEC+ supply chatter.

Read-through: The tape is hedging inflation with gold yet pricing weaker real-economy demand through energy.

Digital assets – high-beta relief

• Bitcoin posts the strongest scores across all horizons (4.9 / 4.5 / 3.1). The bid for “liquidity-beta” confirms that the street sees last week’s policy U-turn as a green light for speculative risk.

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Strategy for the Week Ahead