Archives May 2025

General Motors (GM) slashed its guidance Thursday as the biggest U.S. automaker warned new Trump administration auto tariffs will have a $4 billion to $5 billion impact on full-year profit. However, the the company said it had a plan to offset some of those effects.

GM now sees 2025 adjusted earnings per share of $8.25 to $10.00, down from its previous estimate of $11.00 to $12.00. It reduced its outlook for adjusted earnings before interest and taxes (EBIT) to a range of $10.0 billion to $12.5 billion from $13.7 billion to $15.7 billion.

Even with that, the company explained that it expects “to offset at least 30% of this exposure” through executive actions taken this week based on U.S. production and the elimination of tariff stacking. It added that its adjusted auto free cash flow guidance “gives us the ability to continue investing in U.S. innovation and manufacturing.”

In a letter to shareholders, CEO Mary Barra noted that the carmaker has been in discussions with the president and his team since before the inauguration in January, and it looks forward “to maintaining our strong dialogue with the Administration on trade and other policies as they continue to evolve.” Barra pointed out that in addition, GM has been having “ongoing discussions with key trade partners that may also have an impact.”

On Tuesday, the Chevrolet and Cadillac maker reported better-than-expected first-quarter results, but postponed updating its full-year guidance and its earnings call by two days amid uncertainty about auto tariffs.

General Motors shares have been moving up and down slightly during early trading. The stock price is about 14% lower this year.

Just 100 days into President Donald Trump’s second presidency, his sweeping efforts to remake the U.S. economy are starting to show results.

Starting on the first day of his presidency, Trump unleashed a barrage of executive orders, some of which have had dramatic and immediate impacts on the economy. Trump signed 142 executive orders over 100 days, beating the previous record-holder, Franklin Roosevelt, who signed 99 in 1933, according to an analysis by Deutsche Bank. Trump had signed only 33 by this point in his first term, and Biden just 42.

Many of those orders were related to trade: Trump imposed heavy tariffs on U.S. trading partners, including a 145% tariff on most products from China. These orders are a sweeping reversal of the post-WWII era of free trade policies implemented by U.S. presidents. Trump has said he intends the tariffs to revive U.S. manufacturing jobs and raise revenue to run the government. The economy has just started to feel the effects of those orders, most of which went into effect in April.

Economists said tariffs were the main reason the nation’s economic output shrank slightly in the first quarter of 2025 after nearly three years of solid expansion. Businesses and individuals hoping to beat the tariffs bought a record-shattering amount of imports in March, which are subtracted from the GDP. That put Trump on a short list of postwar presidents who saw the economy shrink in their first 100 days.

One reason for the economic pullback is “uncertainty,” a word that started to appear everywhere as Trump has repeatedly announced, repealed, and modified various import taxes. Uncertainty about future trade policy has forced businesses to delay expansion and hiring plans, raising risks that the U.S. economy will grind into a recession in the coming months, reports show.

U.S. consumers, already weary of inflation, expect tariffs to push up prices even more and have grown increasingly pessimistic about the economy. The plunge in consumer confidence under Trump’s second term is a stark contrast to the trend under his immediate predecessors, and himself during his first term, who all saw confidence rise.

Still, economists have noted a contrast between “soft” data such as surveys, and “hard” data that measures results.

Consumers may be fearful about a recession, but that hasn’t stopped them from spending. Similarly, inflation measures have stayed subdued through March, and unemployment hasn’t risen severely, leading some economists to predict the economy will stay resilient through the tariff turmoil.

U.S. stock futures are pointing sharply higher as market watchers focus on corporate earnings; Microsoft (MSFT) shares are jumping in premarket trading after the company reported strong artificial intelligence (AI) cloud revenue; Meta Platforms (META) shares are rising as advertising revenue helped boost results; Apple (AAPL) and Amazon (AMZN) are set to report earnings after the bell; and Tesla’s (TSLA) chair denies a report that the board had begun a search to succeed CEO Elon Musk. Here’s what investors need to know today.

1. US Stock Futures Surge as Investors Digest Corporate Earnings

U.S. stock futures are pointing sharply higher as investors focus on a parade of corporate earnings reports. S&P 500 futures and Dow Jones Industrial Average futures are up by 1.2% and 0.8%, respectively, as the indexes rose yesterday for a seventh consecutive session. Nasdaq futures are jumping by 1.8% after the tech-focused index shed 0.1% yesterday. Bitcoin (BTCUSD) is rising to trade above $96,000. Yields on the 10-year Treasury note are declining to around 4.15%. Oil and gold futures are down more than 2%.

2. Microsoft Stock Jumps on Strong AI Cloud Growth

Microsoft (MSFT) shares are surging about 9% in premarket trading after the software giant reported quarterly revenue and profit that surpassed analysts’ expectations. The tech titan reported revenue increased 13% year-over-year to $70.07 billion and profit of $3.46 per share, both above Visible Alpha consensus. Intelligent Cloud segment revenue jumped 21% to $26.75 billion and Microsoft said it expected the unit to deliver 20% to 22% growth in the current quarter. While Microsoft shares have risen 15% from their April low, they remain down 6% since the start of the year entering Thursday.

3. Meta Stock Surges as Ad Revenue Helps Boost Results

Meta Platforms (META) stock is jumping 6% in premarket trading after the social media giant reported better-than-expected quarterly results on strong advertising growth. The Facebook parent brought in revenue of $42.31 billion, up 16% year-over-year and above the analyst consensus from Visible Alpha, while its net income of $6.43 per share also topped projections. Advertising revenue grew 16% to $41.39 billion, also beating estimates. Facebook said it plans to boost its capital expenditures this year to $64 billion to $72 billion to grow its AI capacity. Meta’s stock was down 6% for the year entering Thursday.

4. Apple, Amazon Slated to Report Results After Closing Bell

Microsoft’s and Meta’s fellow “Magnificent Seven” companies Apple (AAPL) and Amazon (AMZN) are scheduled to report quarterly results after markets close today. Analysts polled by Visible Alpha expect Apple to report fiscal second-quarter revenue grew 4% year-over-year to $94.66 billion and earnings per share of $1.62, up from $1.53. Amazon is seen reporting first-quarter revenue of $155 billion, up 8%, and adjusted EPS of $1.75, up from $1.46. Shares of Apple are 1% lower in premarket trading, while Amazon shares are 3% higher.

5. Tesla Denies Report That Board Opened Search for CEO Replacement

Tesla (TSLA) chair Robyn Denholm on Thursday denied a report that the EV maker’s board members had started a formal process to find a successor for CEO Elon Musk.The Wall Street Journal reported that board members started the search “about a month ago” as Tesla shares stumbled amid investor concerns that Musk was too focused on his role cutting federal spending as part of the White House administration. Denholm denied the Journal report, writing on Tesla’s X account that “The CEO of Tesla is Elon Musk and the Board is highly confident in his ability to continue executing on the exciting growth plan ahead.” Tesla shares are up less than 1% in premarket trading.

Written by the Market Insights Team

Kevin Ford – FX & Macro Strategist

Wave of hard data reinforces US growth concerns

A wave of US macro data released yesterday points to mounting economic weakness. The economy contracted by 0.3% in the first quarter of 2025, slightly more than expected, marking its first decline since early 2022. This follows the 2.4% growth recorded in the previous quarter, underscoring a sharp reversal in momentum. A key driver of the slowdown was a staggering 41.3% surge in imports, as businesses rushed to stockpile goods ahead of anticipated tariff hikes. This widened the trade gap, with net exports dragging down GDP by nearly 5 percentage points, the largest impact on record. Government spending also contributed to the downturn, subtracting 0.25% from overall growth, its first negative impact since 2022. Additionally, private expenditure saw a significant decline, as businesses and investors navigated heightened uncertainty throughout the quarter. These combined factors highlight deepening concerns over the trajectory of the US economy.

Businesses and consumers scrambled to stockpile goods in anticipation of looming tariff hikes, a pattern previously observed when reports highlighted a widening trade deficit and a surge in durable goods orders. While the economic slowdown largely aligned with forecasts, these pre-tariff distortions had a substantial impact on the overall data, skewing key indicators and amplifying short-term fluctuations.

The slowdown in consumer spending growth to 1.8%, its weakest pace since Q2 2023, suggests that economic weakness will likely extend into Q2. With the direct impact of tariffs introduced on April 2 still yet to appear in the data, underlying consumer strain is becoming increasingly evident. This trend underscores mounting pressure on household activity as shifting trade policies and broader economic uncertainty take hold.

We also got to know the Fed’s preferred measure of inflation for the month of march, which came out slightly higher than expected, but cooled off. PCE prices in the US increased 2.3% year-on-year in March 2025, the lowest in five months but above market expectations of 2.2%. In February PCE prices was revised upwardly to 2.7%. This could be read as bad news for the Fed, as stagflation worries mount.

So, how have markets reacted? In FX, there were no major shifts barring the strengthening dollar. The 10-year Treasury yield briefly climbed 5 basis points to 4.22% following the GDP and PCE data releases but swiftly retreated to 4.16%, right back to its opening level, as growth concerns dominate sentiment. US equities reacted negatively, yet indexes remain surprisingly above pre-April 2 levels. Have markets fully shrugged off reciprocal tariffs, or have they absorbed the sweeping trade measures and embraced the administration’s more dovish stance as approval ratings slide, particularly on economic management? With Q1 2025 corporate earnings reports now underway, businesses may begin revising their earnings expectations downward, especially if the recent GDP contraction extends into Q2, reinforcing concerns over the broader economic outlook.

Loonie steady after wave of macro data

Kevin Ford – FX & Macro Strategist

Canada’s economy slipped 0.2% in February, its first monthly decline since November, as mining, oil and gas, and construction sectors weighed on growth. Mining and energy took the biggest hit, falling 2.5% after two months of gains, while construction dipped 0.5%. Other sectors like transportation, warehousing, and real estate also showed weakness, with residential construction down 0.9%, its steepest drop since April 2024.

The weaker-than-expected figures point to a challenging period ahead, with little to no economic expansion anticipated over the next two quarters. Canadian 10-year yields dipped below 3.12%, nearing a two-week low, as softer domestic and U.S. data reinforced expectations of further central bank easing. The latest Bank of Canada Governing Council deliberations reveal that while some policymakers advocated for a rate cut to support growth, they ultimately opted to hold the policy interest rate at 2.75%, citing ongoing uncertainty. Inflation risks remain subdued, providing room for future cuts if necessary, but officials stressed the importance of a cautious and responsive approach given the unpredictable economic climate. With the BoC’s next rate decision set for June 4, markets are pricing in a 57% chance of a 25 bps cut. Meanwhile, despite growing concerns over a deeper North American slowdown, the drop in short-term yield differential has helped the Loonie test the 1.38 level.

Dollar weakness has been primary support for the Loonie during April, which has gained around 4% against the greenback. The USD/CAD is now testing key support at 1.378, level not seen since October 2024.

Euro softens after historic April rally

George Vessey – Lead FX & Macro Strategist

Last month proved to be the best ever April for EUR/USD since the inception of the euro back in 1999, but the pair has dipped under the $1.13 mark this morning following the optimistic tone from President Trump regarding trade deals with various countries.

The rebound in risk appetite and hopes that the peak of trade policy uncertainty is behind us has weighed on the euro this week. The common currency has been a surprise beneficiary of the global trade war given its status as a cheap liquid alternative, backed by its current account surplus and positive fiscal impulse from the historic German spending plans. Despite the reversal from 3-year highs, investors are weighing contrasting economic signals from the US and Europe, which could support further euro strength in the future. The unexpected contraction in US GDP for Q1 contrasts with the Eurozone’s stronger-than-expected 0.4% growth, driven by resilient domestic demand. Germany expanded by 0.2% as forecast, while France lagged with a modest 0.1% increase.

Inflation trends are mixed across Europe though. German headline inflation eased to 2.1% in April, though core pressures rose, while France’s annual rate remained stable at 0.8%. Money markets are pricing another ECB rate cut in June and 67-basis points of easing in total by year-end.

Mexican Peso stays at 5-year average

Kevin Ford – FX & Macro Strategist

Mexico’s economy grew by 0.2% in the first quarter of 2025, bouncing back from a 0.6% contraction in the previous quarter and beating expectations of flat growth. Agriculture led the way with an 8.1% surge, recovering from a sharp drop at the end of 2024, while industry dipped 0.3% and services remained unchanged. On an annual basis, GDP rose by 0.6%, but the overall outlook remains fragile due to domestic uncertainty, tight financial conditions, and fallout from the U.S. trade war.

The recent appreciation of the peso could ease inflation concerns, while slower growth may help keep broader price pressures in check. Trump’s softened stance on key policies has improved sentiment, with the peso trading stronger in the near term. President Claudia Sheinbaum enjoys high approval ratings, with 67% of Mexicans holding a positive view of her leadership—surpassing her predecessor’s popularity. Despite challenges like tariffs and recession risks, optimism persists, with 54% expecting economic improvement in the next six months and 75% confident Sheinbaum will negotiate better trade agreements.

Euro tumbles, US stocks and dollar gain, Oil continues rout

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: April 28- May 2

All times are in ET

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quothave a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

Qualcomm (QCOM) shares are falling in premarket trading Thursday, a day after the chipmaker’s soft current-quarter revenue outlook outweighed better-than-expected fiscal second-quarter results.

The San Diego, Calif.-based company reported adjusted earnings per share (EPS) of $2.85 on revenue of $10.98 billion. Analysts polled by Visible Alpha projected $2.82 and $10.63 billion, respectively.

The company, which makes most of its revenue from selling chips for smartphones, including those made by Apple (AAPL), said Q2 handset chip sales rose 12% year-over-year to $6.93 billion.

“As we navigate the current macroeconomic and trade environment, we remain focused on the critical factors we can control—our leading technology roadmap, best-in-class product portfolio, strong customer relationships and operational efficiencies,” CEO Cristiano Amon said.

Q3 Revenue Outlook Comes Up Short of Expectations

However, for the third quarter, Qualcomm expects revenue of $9.9 billion to $10.7 billion, with the midpoint below the $10.35 billion consensus estimate.

Qualcomm shares, which entered Thursday down more than 3% this year, are dropping a further 6% in premarket trading.

U.S. stocks fell for a third consecutive month in April as uncertainty about President Trump’s tariff policies wreaked havoc on Wall Street.

The month got off to a dismal start when President Trump’s April 2 “Liberation Day” tariff announcement erased about $6 trillion in market value. Stocks were boosted mid-month by a 90-day pause on most of Trump’s country-specific tariffs and signs that the White House was eager to de-escalate its trade war with China. But the rebound, hampered on Wednesday by data showing U.S. GDP contracted in the first quarter, wasn’t enough to dig stocks out of their hole; the S&P 500 finished April down 0.8%.

Tariffs will likely continue to dominate the conversation on Wall Street in May as the torrent of first-quarter earnings reports early in the month slows to a trickle. Below, we look at five stocks to keep an eye on in May.

Apple

Apple (AAPL) will report its first-quarter results after the closing bell on Thursday, May 1, and the focus will be squarely on tariffs.

The iPhone maker won a tariff exemption during the first Trump administration’s trade war with China in 2018. Perhaps seeing the writing on the wall, Apple has spent the intervening years diversifying its manufacturing base, moving some assembly to countries such as India and Vietnam. Still, the vast majority of Apple products are manufactured in China, putting it squarely in the crosshairs of escalating tensions between the world’s two largest economies. 

Trump has, for now, exempted smartphones and other Apple products from the “Liberation Day” tariffs he announced in early April, which would have raised the duties on Apple products shipped from China, Vietnam, and India by 125%, 46%, and 26%, respectively. But Commerce Secretary Howard Lutnick has warned that exempted consumer electronics will be included in semiconductor-specific tariffs to be announced in the coming months.

Analysts and investors will be eager to hear on Apple’s earnings call how the company is planning for the tariffs to come and how it sees a slowing economy affecting sales. 

Apple shares are down 15% since the start of the year. 

Nvidia

Nvidia (NVDA) is expected to report quarterly results late in the month, and investors will be anxiously awaiting updates on the company’s sales to China and how it expects a slowdown to affect AI investment.

The stock has been dealt a blow this year by rising economic uncertainty and escalating tensions with China. The company recently warned investors that its first-quarter results will take a hit of up to $5.5 billion after the U.S. government tightened restrictions on sales to China. 

On top of that, several leading cloud service providers, including Microsoft (MSFT) and Amazon (AMZN), have reportedly slowed or paused some AI data center buildouts in response to the cloudy economic outlook. Less AI investment from some of the world’s largest tech companies is likely to portend slower sales growth at Nvidia. 

Nvidia stock has fallen after each of its three most recent earnings reports despite consistently topping estimates, a sign Wall Street’s expectations have caught up with Nvidia’s breakneck growth. The stock’s response to May’s results could depend on whether the company’s various headwinds have reset investors’ expectations. 

Nvidia shares are down nearly 19% since the start of the year.

Walmart

Retail giant Walmart (WMT) is slated to report earnings before markets open on May 15. 

Few companies are in as good of a position to deal with tariffs than Walmart. The company has reportedly pressured Chinese suppliers to lower their prices, a tactic unavailable to smaller retailers. It has also had some success getting through to the White House; Trump expressed interest in de-escalating the trade war with China shortly after Walmart, Target, and Costco executives reportedly warned the president that prohibitively high tariffs would eventually lead to empty shelves across the country. 

Walmart’s first-quarter sales are unlikely to be affected by tariffs, the majority of which were announced in April. Retail sales data also suggests consumers, despite cratering confidence in the economy, didn’t slow their spending in the first quarter.

The company’s guidance will be of greater interest to Wall Street—that is, if it issues guidance. Many companies have withdrawn their full-year forecasts, citing the difficulty of predicting future costs and demand without clarity on trade policy. If Walmart were to do the same, it could ratchet up the anxiety on Wall Street and send shockwaves through the stock market. 

Walmart shares are up nearly 8% year-to-date. 

ExxonMobil

ExxonMobil (XOM) is scheduled to report its first-quarter earnings before markets open on Friday, and the Trump administration will likely loom large over the report.

Trump walked a tightrope throughout last year’s presidential campaign, promising to tame inflation by lowering energy costs while also casting himself as an ally of America’s fossil fuel industry. 

In office, he has tried to smooth over the tensions between those two goals. Trump has taken steps to remove regulatory barriers to resource extraction, expedite the permitting of drilling on federal lands, and prevent states from impeding his program to “unleash American energy.”

At the same time, Trump’s trade war has raised the odds of a U.S. recession, causing oil prices to slump. West Texas Intermediate, the U.S. crude oil benchmark, closed at about $58 a barrel on Wednesday, its lowest price in 4 years and below what the average producer needs to profitably drill a new well. 

Exxon’s results and commentary could help investors understand the balance of good and bad news for the industry coming out of Washington. 

ExxonMobil stock has fallen about 2% since the start of the year.

Coinbase

Coinbase (COIN) is also set to report first-quarter earnings this month, and the future appears bright for the crypto exchange. 

The cryptocurrency industry has emerged as one of the few winners of the second Trump administration thus far. Trump has ordered the creation of a Strategic Bitcoin Reserve and a U.S. Digital Assets Stockpile, installed crypto-advocate Paul Atkins as the head of the Securities and Exchange Commission, and wound down major federal lawsuits against the crypto industry.

The prices of major cryptocurrencies like Bitcoin and Ether have declined since Trump took office, battered by the same economic uncertainty that’s hammered the stock and bond markets. That could take a bite out of Coinbase’s transaction revenue, which as of mid-February was on track to surpass last year’s first quarter. Nonetheless, Coinbase forecast subscription and services revenue—less volatile than transaction revenue, which fluctuates with crypto prices—would grow as much as 50%.

Investors will be listening to Coinbase’s earnings call for insights into the company’s efforts to shape the cryptocurrency legislation and regulations being developed in Washington.

 Coinbase shares are down about 18% so far this year.

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Investopedia is dedicated to providing our readers with factual, unbiased information about the best real estate apps in the industry. We curated our list of the best real estate apps by researching 12 different platforms that specialize in real estate listings. We independently collected data from each real estate app and compared each company based on the services and features it provides to consumers, and created a list of the best apps available in the industry. Investopedia was founded in 1999, and since its inception, it has helped its readers make decisions for their financial needs.

How We Chose The Best Real Estate Apps

Our team, comprised of research analysts and staff editors, independently analyzed 12 of the most well-known real estate apps available on digital marketplaces such as Google Play and the App Store. To choose the best real estate App, we found 20 different weighted criteria deemed essential to buyers, sellers, and renters seeking property in the real estate market. We then collected 240 data points and judged each company to find the following: best overall, best for auctions, best for home purchases, best for usability, best for renters, and best for entrepreneurs.

Below are the categories and their respective weights:

• Amenities: 40%
• Management Features: 25%
• Pricing: 22%
• Education: 8%
• Customer Service: 5%

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What’s Predicted From the Fed Next Week—and for the Rest of 2025

So far this year, the Federal Reserve has paused the federal funds rate at its current level for two consecutive meetings. That followed a three-meeting run of rate cuts between September and December 2024 that lowered the benchmark rate by a full percentage point. Previously, the Fed had held its key rate at a historic 23-year high for 14 months.

The Fed’s rate-setting committee will meet again next week. Though nothing will be certain until the Wednesday rate announcement, CME Group’s FedWatch Tool currently shows an overwhelming probability of the central bank holding the fed funds rate steady yet again.

After the May gathering, there will be five more Fed rate-setting meetings in 2025. And according to year-end probabilities reported by the CME Group, traders are currently pricing in about 75% odds that Fed cuts totaling at least 1 percentage point will be executed by December 2025. Most likely, that would occur as four 0.25-point cuts, but the Fed could also choose to make a larger reduction at any meeting.

As for when the Fed’s predicted rate reductions will arrive, markets are pricing in approximately 2:1 odds that the Fed will announce its first 2025 cut on June 18, with a quarter-point reduction. And then traders estimate a majority probability of another quarter-point cut after the July 29-30 meeting.

How Next Week’s Fed Announcement Is Likely to Affect Saving and CD Rates

With no rate move expected from the Fed next week, we don’t anticipate savings account rates to show meaningful change in the immediate term. Since banks and credit unions can change their savings rates at the drop of a hat, they are often comfortable waiting to lower rates until a Fed move is implemented.

That said, there is no guarantee that the top savings account rate—currently 5.00% APY—will remain available, as any given offer can be adjusted at any time. But across our ranking of the best high-yield savings accounts, we don’t anticipate that next week’s likely Fed rate hold will trigger a meaningful change in the general range of APYs you see there.

CD rates, on the other hand, behave a bit differently. That’s because CDs offer you not just a rate for today, but a rate promise for the future—and banks and credit unions don’t want to get locked into paying CD rates they’ll regret down the road. As a result, institutions often change their CD rates in advance of an upcoming Fed rate move, especially when confidence in a Fed decision is high.

So what does that mean for the best CD rates next week? It depends on what the Fed’s statement says, and what signals Fed Chair Jerome Powell gives in his post-meeting press conference. If he hints that the central bankers will likely make a rate cut in June, some institutions could start lowering their CD rates sooner rather than later.

But if the Fed suggests it will be in wait-and-see mode for longer than the market is currently predicting, that could keep CD rates generally where they are until there is stronger evidence the Fed is ready to make a move.

In any case, CD rates are likely to see a gradual drift downward rather than anything dramatic (barring a dramatic move by the Fed). As we’ve said, however, the outlook is very uncertain right now. How President Trump’s tariff policy will impact inflation, economic growth, and—by extension— Fed monetary policy, remains to be seen.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.

Written by the Market Insights Team

The US dollar marked its third consecutive daily gain on strong dollar buying flows for month-end rebalancing, solid corporate earnings and hopes for easing trade tensions, which lifted sentiment. Investors are growing optimistic that tariff pressures may have peaked after President Trump signaled potential trade agreements with India, Japan, and South Korea while expressing confidence in a deal with China. This renewed optimism has supported the dollar, though the greenback still posted its worst monthly performance since late 2022, as the de-dollarization narrative gains momentum. The latest US economic data doesn’t bode well either, thus market participants remain cautious about the broader trajectory of the US currency.

Wave of hard data reinforces US growth concerns

Kevin Ford – FX & Macro Strategist

A wave of US macro data released yesterday points to mounting economic weakness. The economy contracted by 0.3% in the first quarter of 2025, slightly more than expected, marking its first decline since early 2022. This follows the 2.4% growth recorded in the previous quarter, underscoring a sharp reversal in momentum. A key driver of the slowdown was a staggering 41.3% surge in imports, as businesses rushed to stockpile goods ahead of anticipated tariff hikes. This widened the trade gap, with net exports dragging down GDP by nearly 5 percentage points, the largest impact on record. Government spending also contributed to the downturn, subtracting 0.25% from overall growth, its first negative impact since 2022. Additionally, private expenditure saw a significant decline, as businesses and investors navigated heightened uncertainty throughout the quarter. These combined factors highlight deepening concerns over the trajectory of the US economy.

Businesses and consumers scrambled to stockpile goods in anticipation of looming tariff hikes, a pattern previously observed when reports highlighted a widening trade deficit and a surge in durable goods orders. While the economic slowdown largely aligned with forecasts, these pre-tariff distortions had a substantial impact on the overall data, skewing key indicators and amplifying short-term fluctuations.

The slowdown in consumer spending growth to 1.8%, its weakest pace since Q2 2023, suggests that economic weakness will likely extend into Q2. With the direct impact of tariffs introduced on April 2 still yet to appear in the data, underlying consumer strain is becoming increasingly evident. This trend underscores mounting pressure on household activity as shifting trade policies and broader economic uncertainty take hold.

We also got to know the Fed’s preferred measure of inflation for the month of march, which came out slightly higher than expected, but cooled off. PCE prices in the US increased 2.3% year-on-year in March 2025, the lowest in five months but above market expectations of 2.2%. In February PCE prices was revised upwardly to 2.7%. This could be read as bad news for the Fed, as stagflation worries mount.

So, how have markets reacted? In FX, there were no major shifts barring the strengthening dollar. The 10-year Treasury yield briefly climbed 5 basis points to 4.22% following the GDP and PCE data releases but swiftly retreated to 4.16%, right back to its opening level, as growth concerns dominate sentiment. US equities reacted negatively, yet indexes remain surprisingly above pre-April 2 levels. Have markets fully shrugged off reciprocal tariffs, or have they absorbed the sweeping trade measures and embraced the administration’s more dovish stance as approval ratings slide, particularly on economic management? With Q1 2025 corporate earnings reports now underway, businesses may begin revising their earnings expectations downward, especially if the recent GDP contraction extends into Q2, reinforcing concerns over the broader economic outlook.

Euro softens after historic April rally

George Vessey – Lead FX & Macro Strategist

Last month proved to be the best ever April for EUR/USD since the inception of the euro back in 1999, but the pair has dipped under the $1.13 mark this morning following the optimistic tone from President Trump regarding trade deals with various countries.

The rebound in risk appetite and hopes that the peak of trade policy uncertainty is behind us has weighed on the euro this week. The common currency has been a surprise beneficiary of the global trade war given its status as a cheap liquid alternative, backed by its current account surplus and positive fiscal impulse from the historic German spending plans. Despite the reversal from 3-year highs, investors are weighing contrasting economic signals from the US and Europe, which could support further euro strength in the future. The unexpected contraction in US GDP for Q1 contrasts with the Eurozone’s stronger-than-expected 0.4% growth, driven by resilient domestic demand. Germany expanded by 0.2% as forecast, while France lagged with a modest 0.1% increase.

Inflation trends are mixed across Europe though. German headline inflation eased to 2.1% in April, though core pressures rose, while France’s annual rate remained stable at 0.8%. Money markets are pricing another ECB rate cut in June and 67-basis points of easing in total by year-end.

Pound’s correlation with oil prices

George Vessey – Lead FX & Macro Strategist

Oil prices and GBP/USD have shown an inverse correlation over the past few years due to the UK’s status as a net oil importer and the US being a net-energy exporter. When oil prices rise, import costs increase, potentially weighing on the UK economy and weakening the pound. Conversely, when oil prices decline, lower energy costs support economic activity, benefiting GBP. Additionally, a stronger oil market can boost demand for commodity-linked currencies like the US dollar, creating downward pressure on GBP/USD.

Thus, the circa 16% decline in oil prices in April to four-year lows have coincided with a strong 3.5% rise in GBP/USD to three-year highs. Oil’s recent plunge is the worst monthly performance for April in over three decades in what’s typically it’s best month. But the overarching reason for falling oil prices reflects expectations of slowing global trade and therefore reduced energy consumption. Hence, if global recession fears increase, this wouldn’t necessarily support the pound. While lower oil prices reduce import costs for the UK, they often signal slowing global demand, which can hurt risk sentiment and weigh on GBP. Additionally, weaker oil prices can dampen inflation expectations, increasing the likelihood of central bank rate cuts – more Bank of England easing risks potentially putting downward pressure on the pound.

Attention turns to the May 5 OPEC+ meeting, which comes at a time when the demand outlook is already weighed down by global trade tensions. But ultimately, the path of GBP/USD is largely dependent on the US dollar, which is currently under threat from structural concerns and further capital outflows given the erosion of trust in US policy and financial stability.

Euro tumbles as US stocks and dollar gain

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: April 28-May 2

All times are in BST

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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.