Hello MarketShalians, Welcome to today’s World Economy Actions and Its Impact financial blog at MarketShala. Let us take a look at what major buzz related to the economic actions are taking place in the country and the world and what impact they are going to have.
Table of Contents
Trump’s Tariff Cuts Trigger Currency Volatility Surge and $90 Billion Hit to US Tourism in 2025
Donald Trump’s tariff cuts have pushed currency volatility to multi-year highs and boosted demand for foreign exchange hedging products as companies struggle to keep up with market fluctuations. Currency fluctuations in recent times have surged to levels not seen since the turmoil following the collapse of Silicon Valley Bank and Credit Suisse in March 2023. US tourism and hospitality revenue is forecast to fall sharply by $90 billion in 2025 as many international tourists cancel US trips. The fall in March may be due to Easter falling in March last year, so full month April data for tourist arrivals and spending will paint a better picture.
Trump’s Draft Order Proposes Major Overhaul of US State Department by October 1
A draft executive order from Trump outlines major reforms to the U.S. State Department. It suggests shutting down all “non-essential” embassies and consulates in sub-Saharan Africa and merging regional bureaus globally. Additionally, the proposal recommends removing various offices and roles dedicated to climate change, women’s affairs, democracy promotion, human rights, migration, and criminal justice. According to the order, the State Department’s “complete structural reorganization and transformation” should be completed by October 1.
China Holds Lending Rates Steady as Trade War Tensions Rise Over US Tariff Deals
China has kept key lending rates steady to support the yuan, as macro data remains strong. Chicago Fed chief says Trump tariffs could lead to a drop in economic activity in the summer after ‘artificially high’ start. China has warned countries against striking deals with the US that could harm Beijing’s interests, gaining an edge in the trade war with Washington and showing how others risk being caught in the middle. In a statement issued on Monday, the Commerce Ministry stated that it respects other nations’ efforts to settle trade disagreements with the United States. However, it emphasized that China is strongly against any agreements that compromise its own interests.
Asian Bonds See Highest Foreign Inflows in 7 Months Amid Rate Cut Hopes and US Tariff Fears
Asian bonds attracted the biggest monthly foreign inflows in seven months in March, driven by expectations of rate cuts from regional central banks and their appeal as a haven from concerns of US tariffs and a slowdown in global assets. Foreigners bought $7.16 billion worth of regional bonds during the month, their biggest monthly net purchase since August 2024, according to data from regulatory authorities and bond market associations in South Korea, India, Indonesia, Thailand and Malaysia. South Korean bonds attracted strong inflows for a second consecutive month, totaling $3.99 billion – the most since October 2024. Indian bonds saw net inflows of $1.11 billion, marking the biggest monthly increase in seven months. Meanwhile, the Indonesian, Malaysian and Thai bond markets recorded cross-border inflows of $900 million, $732 million and $421 million, respectively.
Trump Tariffs Spark Market Uncertainty: Fed Warns of Inventory Surge, Eiseman Takes Heavy Losses
1. Chicago Fed President Austan Goolsbee said Sunday that U.S. business owners are piling up inventory because of President Donald Trump’s tariffs. “We don’t know, 90 days from now, when they’re going to revisit the tariffs, we don’t know how big they’re going to be” Goolsbee said. Putting aside short-term uncertainty and financial pain, the Fed’s Goolsbee expressed optimism about the nation’s long-term economic outlook.
2. “Don’t try to play the hero,” warns Steve Eiseman of ‘The Big Short’ fame, commenting on the uncertainty caused by tariff-related tensions. In a trade war, everybody will suffer. The U.S. will suffer the least. ‘I’m only long. I’ve lost a lot.’ “There are people in the market who are upset that they lost money” Eiseman said. “I’m not fooling you. I’m one of those people. I’m only long. I’ve lost a lot”.
3. Which countries could work most quickly to negotiate a tariff deal with the Trump administration amid tariff concerns? Taking into account geo-economics and the country’s position in this regard, the countries that would be the first to get a tariff deal are likely to be: a. Mexico b. Canada c. Japan d. Korea e. India f. UK g. Vietnam.
Indian Stocks Rally on Private Bank Earnings and Trade War-Safe Haven Appeal: Is the Momentum Sustainable?
Indian stocks rose for the fifth consecutive session on the back of strong earnings from private lenders and growing interest for Indian assets among fund managers looking to avoid the trade war.
The recovery in Indian markets was expected to be led by the financial sector and the consensus is that the trade has been good and momentum is still there. With the RBI releasing substantial liquidity injections, cutting rates and announcing macro prudential easing measures, financial sector attractiveness has been the top trade in Indian markets.
Having said that, the global scenario is highly uncertain and volatile, as we saw during the 2008 GFC, after initial resilience, Indian markets also corrected. Hence investing a fixed amount regularly and avoiding investing a large amount on gap ups is a good strategy, while staying the course and letting the India story feed into your portfolio. No FOMO buying, there will be dips and volatility ahead and the global story is still a work in progress. Asset allocation, diversification and long-term investing benefit from compounding. Golden rules that remain relevant.
Conclusion and disclaimer
The content on MarkShala.com is intended for educational and informational purposes only. We specialize in writing blogs on financial planning, investment strategies, economic trends, and related topics. While we strive to provide accurate and reliable information, the content should not be taken as professional financial, investment, or legal advice.
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