🔥 OPEC+ stoked the fire

What’s going on here?

Data out on Friday showed the US jobs market fared better than anticipated – but pesky levies could soon stomp all over corporate America.

What does this mean?

The US notched 228,000 new jobs in March – well above the 140,000 predicted and February’s revised 117,000. That’s its strongest in three months, showing the labor market holding relatively firm – even though the unemployment rate reached a slightly higher-than-expected 4.2%. A few months ago, this could’ve indicated that the economy was in the clear. But reciprocal tariffs have economists both trimming economic outlooks and increasing odds of recession. The job market, then, might be enjoying some rare relief before higher levies take hold.

Why should I care?

For markets: Here comes the retaliation to the retaliation.

Traders now expect four interest rate cuts this year – one more than last week. That’s because they expect the economy to need serious support (lower interest rates encourage borrowing and spending). Enough, in fact, to overshadow the need for higher rates to manage any tariff-fueled inflation. Now, the full impact of those taxes will depend on how trade partners respond. But with China already matching the US’s increased levy and others expected to follow, a global trade war looks increasingly likely – and that could push multiple major economies into recessions.

For you personally: Investors felt defensive.

Investors rushed to sell stocks after the US president revealed his tariff table. But not every asset was kicked to the curb. Many investors stocked up on defensive stocks – including consumer staples, which folk buy no matter what – as well as safe-haven assets like gold and short-term government bonds. If you’re looking to buy the dip, though, be careful. It’s tough to predict the cheapest point – and getting it wrong might put you in the red. You could consider “dollar-cost averaging” instead: a strategy to help smooth out entry prices during bumpy markets.

What’s going on here?

OPEC+ announced a significant oil production hike on Thursday, pouring gasoline on this week’s geopolitical flames.

What does this mean?

OPEC+ – the group of major oil-producing nations – will increase its output from May on, by triple what was expected. This is the oil industry’s equivalent of a time-out. The more oil on the market, the cheaper it becomes, which tamps down profit for sellers – and the cartel wants to show a few members the naughty corner. Kazakhstan and Iraq have both been accused of producing more liquid gold than agreed. Going forward, nations will likely play by the rules: Saudi Arabia’s energy minister warned that they’ll face the consequences otherwise.

Why should I care?

For markets: “Timber!”

The US president revealed reciprocal tariff levels the day before this announcement, and predictions that they’d restrict global trade and economies pushed oil prices south. Then, after the news of this production hike, the benchmark oil price Brent crude slipped by another 7% – its biggest drop in two years. You might expect that to ease inflation a little, as energy costs influence prices of goods and services across the board. But the impact of tariffs will likely more than wipe out oil’s influence, with over 60 countries expected to fold some of their rising levies into prices. And that’s without accounting for future retaliation…

Zooming out: Welcome to The Upside Down.

News of reciprocal tariffs has already dealt the S&P 500 index its worst blow since 2020. And that could just be the start: JPMorgan said the taxes would mark the biggest hike since 1968, forecasting a 60% chance of a US recession – up from its previous 40% – if they stick. They could pull Europe under, too. The region’s economy is far from secure, and now it has to withstand the effect of fresh 20% tariffs. It’s an “inverted world”, as the European Central Bank’s president put it.