US economic activity continues to slow in April, according to PMI survey data. Output rose last month at its slowest pace since Dec 2023 via the US Composite Output Index, a GDP proxy. “The early flash PMI data for April point to a marked slowing of business activity growth at the start of the second quarter, accompanied by a slump in optimism about the outlook,” said Chris Williamson, chief business economist at S&P Global Market Intelligence, which published the report. “At the same time, price pressures intensified, creating a headache for a central bank which is coming under increasing pressure to shore up a weakening economy just as inflation looks set to rise.”

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Next week’s initial estimate for US GDP in the first quarter is on track for a sharp downshift in growth, based on the median nowcast calculated by CapitalSpectator.com via several sources.

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The IMF cut its global growth outlook for 2025, citing tariffs as a factor. US output is expected to downshift to a 1.8% increase this year, nine-tenths of a percentage point below the previous forecast in January. “Intensifying downside risks dominate the outlook, amid escalating trade tensions and financial market adjustments,” the IMF advised in its revised World Economic Outlook. “Divergent and swiftly changing policy positions or deteriorating sentiment could lead to even tighter global financial conditions. Ratcheting up a trade war and heightened trade policy uncertainty may further hinder both short-term and long-term growth prospects. Scaling back international cooperation could jeopardize progress toward a more resilient global economy.”

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A new world order has emerged in the three weeks since President Trump on Apr. 2 announced “Liberation Day” and rolled out US tariffs. From an investing perspective it’s safe to say it’s been a shock heard around the world, and markets are furiously repricing a new set of risk factors for a radically different outlook for economic activity, financial assets, trade policy, and assumptions about safe havens.

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Gold surged to another record high in Monday’s trading, closing near $3,432 an ounce, and in early trading today it reached $3,500. “As tariff tensions continue to move at a fevered pitch, we continue to see gold prices move to the upside as a safe haven response,” said David Meger, director of metals trading at High Ridge Futures.

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Financial markets are always pricing in uncertainty and risk, but the task has become dramatically more challenging in recent weeks after the US upended its longstanding trade policy. A repeat performance sentiment-roiling activity appears in store for the days ahead as investors wrestle with a series high-stake unknowns.

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China warns countries it will retaliate if governments engage in agreements with the US that threaten Beijing’s interests. “Appeasement cannot bring peace, and compromise cannot earn one respect,” a Chinese Commerce Ministry spokesperson said. “China firmly opposes any party reaching a deal at the expense of China’s interests. If this happens, China will never accept it and will resolutely take countermeasures.” On Friday, China’s Shanghia Stock Exchange Composite Index closed at a roughly middling level relative to recent history.

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Rising US bond prices have offset the slide in US equities so far this year, but the outlook for fixed income may be more precarious than the current rear-window perspective suggests.

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Federal Reserve Chairman Powell outlined a plan on Wednesday for a scenario of higher inflation and slower growth. “The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he said at the Economic Club of Chicago. “For the time being, we are well positioned to wait for greater clarity” regarding policy changes linked to immigration, taxation, regulation, and tariffs, he noted. The policy-sensitive US 2-year Treasury yield eased yesterday, closing near the low of recent months and signaling that the market is still expecting rate cuts at some point in the near term.

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Standing alone among US equity factors this year, the low-volatility strategy is holding on to a modest gain year to date. In sharp relief, the rest of the factor field is posting varying degrees of loss, based on a set of ETFs through yesterday’s close (Apr. 15).

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