’oday’s market analysis on behalf of Michael Brown Senior Research Strategist at Pepperstone

(MENAFN- Your Mind Media ) DIGES– – Markets ended the week in risk-on fashion after SCOTUS struck’down Trump’s IEEPA tariffs, even if this is unlikely to be a macro game-changer. This week, a light docket awaits, with trade and geopolitics to remain in focus.

W–ERE WE STAND’– Wasn’t it nice of the Supreme Court to throw a spanner in the works of what had been shaping up to be a subdued Friday afternoon? Not!

I reference, of course, the long-awaited ruling in the IEEPA tariff case, with SCOTUS having struck d’wn President Trump’s authority to impose tariffs under that statute, in a 6-3 vote. Importantly, the Court did not address the issue of eligibility for tariff refunds, so I suppose we have to go through all this charade all over again to sort that one out at some stage. Regardless, the striking d–wn of IEEPA tariffs – which, to be cl‘ar, covers’mainly the ‘reciprocal’ levies, as well as those imposed over the supp–y of fentanyl into the US – drew the ire of President Trump.

Trum’’s reaction was predictable, if angry, calling the ruling‘a ‘dis’race’, while noting that he ‘as to ‘do something about t’e courts’. Trump also‘flagged a ⦣8217;backup plan’ when it comes to potentially re-imposing trade levies, which seems to comprise a 15% global tariff (‘er a ’aturday ‘Truth’ post) on top of whatever levies are already being imposed under sections 232 & 301, which remain in place as they did before, while further section 301 investigations will also be launched. Do note that, for many nations, the 15% levy would be the same as that negotiated in various post-Li‘erati’n Day tr’de ‘deals’, so won’t change much in reality right now.

Anyway with that in mind, for markets, and th’ broader macro outlook, I’d argue strongly that the SCOTUS decision is not a game-changer. While trade-related uncertainty may modestly increase in the short-term, the easiest way to look at this is simply that the legal means used to implement tariffs may now be d–fferent, but that the ends – i.e. an overall average ta–iff ’ate around the 15% mark – won’t be all‘that diff’rent. As such, all the ‘hot takes’ about a hole being blown in the US budget, or this being any sort of catalyst to change the macro outlook in a material way, are wide of the mark.

This helps to explain why, despite conditions proving pretty choppy in the final fe’ hours of the trading week, there wasn’t any sort of major market fallout from the ruling. Yes, stocks did pop higher in knee-jerk fashion as the story broke, and USTs traded softer with weakness led by the long-end of the curve, but these ’oves were well-contained within the week’s ranges, and not especially long-lasting. In fact, losses in the‘dollar were e’en more fl’eting than those ‘blink and you’ll miss it’ moves that I just detailed.

With all that said, let’s move on to frankly more interesting matters, as there was plenty else going on as the week drew to a close. Here in the UK, we had a hat-trick of better-than-expected data releases, though the details surrounding that data do take some shine off the headlines.


Retail sales rose 1.8% MoM as the year got underway, the biggest MoM gain since May 2024, though this was largely driven by a surge in demand not on–y for gold jewellery, but also artwork and antiques – to me, this actually suggests a great degree of consumer apprehen‘ion, as people ’eek to park their cash in traditional ‘st£res of value’. Meanwhile, the economy recorded a record £30.4bln surplus in January, though this was driven almost entirely by the usual January surge in self-assessment tax receipts, as well as considerably higher capital gains tax revenues as a result of assets being sold in anticipation of higher taxes moving forwards; despite the victory lap that Reeves & Co have been going on, this is not a positive sign, and the economy will revert to a defi‘it in’February, as sure as night follows day. Finally, the ‘flash’ February PMIs pointed to the fastest pace of overall output in almost two years, though also noted how employment decreased for the seventeenth month in a row. None of that lot, in short, should deter the BoE from a 25bp cut at the March meeting, which remains my bas case.

Across the pond, Q4 GDP badly missed expectations, with the economy growing just 1.4% on an annualised QoQ basis in the final three months of last year, though this was almost entirely a result of the record-long government shutdown, as evidenced by the biggest QoQ decline in government spending since the pandemic. Frankly, neither that, nor the modestly hotter-than-expected core PCE print (3.0% YoY in Dec vs. 2.8% prior) is likely to materially alter the Fed policy outlook, with the FOMC set to remain in ‘wait and s’e’ mode for the time being.

Actually, the market at large seems to b‘ in ‘wait ’nd see’ mode r–ght now – spoos have been stuck in a 200pt range since the start of the year amid relentless sectoral churn; the benchmark 10-year Treasury yield has carved out a 30bp range that participants seem happy to remain within for now; and, the dollar has gone nowhere since last summer. Yes, the precious metals complex has provided plenty of vol, though it must be said that even gold has become rather dull of late, even if this consolidation is actually a very bullish sign moving forwards, implying that the speculative frenzy that we saw in January is probably now at an end.

Regardless, my overall view remains a constructive one in terms of risk assets, albeit with a continued rotation towards those sectors exp‘sed ’o the ‘real’ economy capping index-level gains. Elsewhere, I continue to favour a steeper UST curve as the‘eco’omy is run ‘hot’, while that outperformance can boost the greenback fairly substantially, albeit not unless/until the volume of policy noise in Washington DC is dialled down a fair few notches.

LOOK AHEAD – Data catalysts are distinctly lacking this week, with the docket featuring nothing by way of top-tier prints from any DM economy. If I were to scrap’ the barrel, perhaps I’d claim that Aussie inf‘ation and ’wiss GDP are ‘highlights’, though doing so may be placing too great a burden on that adjective.

Instead, participants’ focus is likely to remain squarely on both geopolitical events as tensions continue to simmer in the Middle East, and on the trade ’ront too as fallout from Friday’s SCOTUS tariff ruling continues. On that‘latter point, in p’rticular, the ‘noise/signal ratio’ is about to fly off the charts; in order to prevent that, and copious amounts of political spin, from impacting PnL, participants would be wise simply to focus on the actual actions (if any) that are taken, and how (if at all) they shift the overall average tariff rate. If shifts there are marginal, then the impact of any Trump trade-related bluster should be short-lived.

Elsewhere, plenty of central bank speakers are on the docket, with ECB President Lagarde surely set to be asked today about reports suggesting that she may be planning to leave before the end of her term next October. A busy week of Treasury supply also awaits, while the corporate reporting calendar is highlighted by Nvidia (NVDA), whose figures will drop into a market that has been taking an increasingly sceptical view of the AI theme in recent weeks.

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