Market outlook for week ahead – April 20th, 2025

[Forum Admin]

Market outlook for week ahead – April 20th, 2025

 

Markets remain fragile as stagflation risk rises and the FED stays on the sidelines. Here's what we're watching this week:

What’s happened

• Last Week: We saw some of the weaker 'soft' data begin to spill over into the 'harder' data, with Philly Fed employment being lower and New Orders and the Manufacturing Index down substantially. Alongside this, the Prices Paid were up significantly. Therefore, we have a very negative dynamic beginning to play out: an economic slowdown with rising prices and stagflation. Many assets, particularly risk assets, perform poorly in this environment. 
  
• Big Picture: Risk assets will likely decline as the FED remains on pause. We cannot cut rates while we're seeing inflation expectations rise due to the tariffs, and the FED cannot cut rates to increase inflation expectations. They'll only do so when the economic data has a material downturn. This might look something like a negative Non-Farm Payrolls number, for instance.
  

What’s next
Markets are calm. But behind the scenes, a perfect storm of policy paralysis and rising inflation may already set the next leg down.
Keep reading to see what assets we’re watching—and why.

What’s coming next week

• Throughout the week, there isn't any significant data out, so the markets, from a macro data point of view, the hotter weeks' focus will be on any new rhetoric out of the administration and any progress on trade deals. From a macro data point of view, the hotter weeks are the first two weeks of May.
  
• Wild Card: Has the Trump administration made any realistic progress on whether they can legally remove Chairman Powell from the FED? Most likely, this won't be able to happen. But, if the administration finds a way (a legal way) in which they can remove Chairman Powell, markets would likely puke lower on the announcement of this.
  

Levels we’re watching.

- BTC: BTC is in the middle of the range here, with $82k as the key support and $88k as a key horizontal resistance. If $82k breaks, we're looking at the $65k to $74k zone to accumulate. If $88k breaks to the upside, we will reassess.
- Setup: We'll remain patient until BTC breaks its range. We expect that it'll be to the downside. Regarding longer-term accumulation levels, we're eyeing the $65k to $74k levels as a zone where we'll get aggressive with our buys. We'll consider small ads from $74k to $78k, but our central buying size will be between $65k and $74k.

In the short term, BTC's rally can continue, but we feel that any upside is capped here, and therefore, price pulling back is the more likely outcome over the next week.
We're ultimately remaining patient here as the setup for risk assets isn't favourable while the FED remains on pause and there's substantial uncertainty around the Trump administration's policies. However, these current headwinds will eventually become tailwinds: clarity around trade policy and a Fed that can cut rates due to a slowdown.
This means lower prices in the short term, but we'll be able to buy up. Then, the tailwinds mentioned above in the later part of this year and 2026 will support our positions.