Traders worldwide are eyeing fresh guidance on the trajectory of US monetary policy as markets react to significant developments. US President Donald Trump has announced a 25% tariff on steel and aluminum imports, affecting all countries exporting these materials to the United States. This move has injected a new layer of complexity into market dynamics. Meanwhile, gold has captured attention with its unprecedented surge, crossing the $2,900 mark for the first time in history. Investors are also closely watching a series of key events this week, including the auction of US Treasury bills and crucial speeches by prominent financial leaders.
On Monday, the US 10-year yield was trading around 4.49%, a slight recovery from last week's fresh yearly low of 4.40%. The US Treasury plans to auction 3-month and 6-month bills at 16:30 GMT, providing further insights into investor sentiment and demand for US debt instruments. Despite these developments, the US Dollar Index (DXY) remains relatively stable at approximately 108.00, reflecting a muted response amidst ongoing tariff discussions.
The imposition of tariffs by President Trump adds a layer of volatility to the market. This announcement has not only influenced the currency and commodities markets but also reinforced gold's status as a safe-haven asset. As the precious metal prints fresh all-time highs, traders are paying close attention to the Federal Reserve's next moves. The CME FedWatch tool currently shows a 93.5% probability that the Fed will maintain interest rates at their current levels during its meeting on March 19.
In addition to domestic economic signals, international factors are also playing a critical role in shaping market movements. European Central Bank (ECB) President Christine Lagarde is set to address the European Parliament later today, providing insights into the ECB's policy outlook. Her speech will be closely monitored by traders seeking clues on how European monetary policy might influence global financial trends.
Meanwhile, the US market landscape is marked by notable trade data. According to the US Census Bureau, Mexico emerged as the leading exporter to the United States in 2024, with exports valued at $466.6 billion. Together with China and Canada, these countries accounted for 42% of total US imports, highlighting their significant role in America's trade ecosystem.
The anticipation surrounding Federal Reserve Chair Jerome Powell's upcoming semi-annual testimony at Capitol Hill is palpable. Scheduled for Tuesday and Wednesday, his testimony is expected to provide further clarity on the Fed's approach to managing inflation and economic growth amidst global uncertainties.
Despite the potential for market volatility driven by tariff-related news and geopolitical dynamics, major indices began the week in positive territory, trading in the green on Monday. The resilience of equities underscores investor confidence amid a complex economic backdrop.