Awesome Dive Sites

Econ World

By Carmel Crimmins, Reuters Econ World podcast host

Hello there,

So the Fed stood pat on interest rates, as expected, and Chair Jerome Powell said they're not in a hurry to lower interest rates after a string of reductions last year.

The decision gives the U.S. central bank time to evaluate how President Donald Trump's policies on immigration, tariffs and taxes may impact the economy.

It comes a week after Trump said he would demand lower rates. Powell told reporters he had not been in touch with the president and said the public should be confident Fed policymakers were keeping their heads down and doing their work.

Powell downplayed the macro impact of the stock shakeout triggered by a new, low-cost AI model from Chinese startup DeepSeek but he did say they are watching it.

As my colleague Mike Dolan points out, Powell has good reason to keep very close tabs on any artificial intelligence wobble on Wall Street. This week's falls hit U.S. interest rate markets hard, possibly reflecting the sensitivity of the wider U.S. economy to the fortunes of the equity market.

Over on the U.S. bond market, investors are gearing up for increased volatility and staying defensive amid uncertainty about the impact of the Trump administration's policies.

On this week's episode of Reuters Econ World we dive into the world of bond investors who go on the attack – aka the bond vigilantes – and whether the Trump administration may be in their sights. Listen here.

China's AI offerings, meanwhile, keep rolling in. Hot on the heels of DeepSeek, e-commerce company Alibaba has released a new version of its AI model, claiming it surpasses DeepSeek's offering across various benchmarks.

Despite the AI buzz, global investors who historically bet on China's economic development are ditching grand narratives of long-term prosperity and instead adopting more modest views. They're looking instead to the market as an opportunity for smaller bets with quicker payoffs.

In India, Prime Minister Narendra Modi will hope to shore up faltering economic growth when his government unveils its budget on Saturday. The world's fifth-largest economy is expected to post its slowest pace of growth in four years, amid frail urban demand and inflation risks fuelled by a weak currency.

President Trump weighed heavily north of the border today with the Bank of Canada cutting interest rates by a quarter of a percentage point and warning that a tariff war triggered by the United States could cause major economic damage.

Trump is promising to impose a 25% tariff on all imports from Canada on Saturday. Some economists think the Bank of Canada will become more aggressive on rate cuts in the face of tariffs but the risk is that such levies drive up inflation.

The European Central Bank is expected to cut interest rates by 25 basis points when it meets on Thursday as policymakers look to boost a sluggish economy.

Wednesday data showed bank lending to firms in the 20-nation euro zone picked up last month, a sign that recent rapid interest rate cuts have started to flow through to the real economy.

As always, I'd love to hear from you by hitting reply on this email or finding me on LinkedIn.

The headlines

The chart

Yields on 10-year Treasury notes are going their own way since the start of the Fed's rate-cutting cycle.

The podcast

" This whole idea of vigilantism ... there's almost an intent that that word kind of connotes, but that's not really true. It's a bunch of economic actors who are making their decisions to make profit. And then eventually it ends up sort of putting some kind of a check on government."

Reuters Financial Industry and Financial Markets Editor Paritosh Bansal on the latest episode of Reuters Econ World. Listen here.

On this week's show, we go deep on bond vigilantes and how they could check President Trump's power.