The US central bank is set to announce its interest rate decision this week, and analysts widely expect that rates will remain unchanged. This anticipation stems from the Fed’s commitment to maintaining economic stability amidst ongoing market fluctuations.
Last week saw a slight uptick in optimism as both stock and cryptocurrency markets reported gains, largely attributed to easing tariff concerns. Yet, recent developments, including an unexpected contraction in GDP for the first quarter, have distinctly shaken market sentiment. Reports suggest this contraction may be linked to companies front-loading orders in anticipation of tariffs, raising questions about the underlying economic momentum.
Compounding these concerns, President Trump has indicated he will not engage in discussions with China’s President Xi this week. In a potential escalation of trade tensions, he criticized Beijing’s trade practices, asserting that they are “ripping us off” while stating that US and Chinese officials are discussing “different things.” This rhetoric raises apprehensions about future trade relations and their impact on market stability.
Economic Events May 5 to 9
Consumer sentiment has notably declined in April for the fourth consecutive month, returning to levels not observed since the pandemic. Households appear to be bracing for further price increases, heightening concerns regarding consumer spending and economic health.
Key economic indicators to keep an eye on this week include the ISM Services PMI and the April S&P Global Services PMI, both due on Monday, which will reflect business conditions in the US services sector. These reports serve as essential tools for analysts to gauge potential shifts in economic momentum.
On Wednesday, the Federal Reserve will deliver its much-anticipated interest rate decision. Current data from the CME Fed Watch tool indicates a 96% probability that rates will remain unchanged at 4.25% to 4.5%. Analysts, including those from Bloomberg, anticipate that Fed Chair Jerome Powell will reaffirm a commitment to price stability rather than lean towards the traders’ expectations of rate cuts starting this July.
Key Events This Week:
1. S&P Global Services PMI data – Monday
2. ISM Non-Manufacturing PMI data – Monday
3. Fed Interest Rate Decision – Wednesday
4. Fed Press Conference – Wednesday
5. Initial Jobless Claims data – Thursday
6. ~20% of S&P 500 companies report earnings…
— The Kobeissi Letter (@KobeissiLetter) May 4, 2025
As the week unfolds, four of the so-called Magnificent 7 tech stocks are set to report earnings: Microsoft and Meta Platforms on Wednesday, followed by Apple and Amazon on Thursday. These results will undoubtedly provide further insights into market sentiment and economic resilience.
In commodities, gold prices saw an increase on Monday, buoyed by a weaker dollar as investors sought clarity on future trade policies.
Crypto Market Outlook
Meanwhile, the crypto markets faced challenges as they began the week with a downturn. After a weekend of relative stability, total market capitalization shrank by 3.3%, dropping back towards the $3 trillion mark. Bitcoin fell below $94,000, marking its lowest level this month after a 2% decline for the day, while Ethereum dipped below $1,800. Many altcoins also faced significant losses as market anxiety set in.
For further insights into the volatility affecting the crypto markets this week, check out related analyses on emerging trends and potential market disruptions.
