Today’s market analysis on behalf of Ahmad Assiri Research Strategist at Pepperstone
March 27, 2025: Markets enter the week with a blend of calm and latent tension. Monday’s holiday closures in New York and London offered a pause for reflection, but that precedes a cluster of catalysts that could redraw or firmly validate the yield curve and the wider risk narrative.
Today’s Treasury auctions, a supply test that comes after 30-year yield punched through 5.15 percent for the first time since 2007, will reveal how much appetite remains as Washington’s funding needs expand. The Treasury is selling 183 billion dollars in two, five and seven-year notes, and coverage ratios will be scrutinised as closely as economic print this week. A routine oversubscription would signal that investors can absorb incremental issuance without demanding an additional premium, while anything less than a solid bid could push yields higher and reignite worries about long-end funding.
Those worries are compounded by a fiscal stance that currently offers treasury holders little comfort. The reconciliation bill that cleared the House last week paves the way for wider deficits, yet there is scant sign of a credible spending cap that might placate holders of the 30-year. At the same time the market is repricing inflation expectations, growth prospects and recession risks in tandem – a combustible mix – while US-EU trade frictions lurk in the background. The White House has deferred a 50% tariff on European imports from 1 June to 9 July, buying time for negotiation but compressing July calendar into what’s likely to be a volatile month.
Consumer confidence figures later today offer an early read on spending resilience, while Friday’s core PCE inflation the Fed’s preferred gauge, is likely to cement wait-and-see and could delay bets on a fourth-quarter rate cut. Consensus looks for 2.5% year-on-year, a shade below April’s 2.6%.
Corporate risk comes to the fore after Wednesday’s close, when Nvidia’s earnings call. Options imply a swing of roughly plus or minus 6.8%, still large for a three-trillion-dollar firm. Investors want confirmation that revenue growth can keep pace with AI demand and that margins remain strong. The stock sits well above its 200-day moving average, yet historical data shows post-earnings pullbacks when pre-release optimism over-extends.
Threaded through these events is a growing conviction in asset management circles that the US dollar faces a structural weakening driven by persistent fiscal, imbalances and uncertainty around growth. That thesis is already visible in gold’s resilience and in the stability of Asian surplus-currency pairs. The relationship between bullion and Treasury yields remains pivotal – a snap-back in yields would invite profit taking in gold while a calm auction sequence could keep the metal supported.
In short, what began as a quiet start to the week quickly morphs into an interlocking-keys scenario. Treasury sales will test the market’s tolerance for supply; expansionary fiscal policy may keep yields elevated; tariff suspense hangs over July; and a mega-cap tech print could reset sentiment across the semiconductor complex. The auctions and the yield curve dominate today’s focus, setting the stage for Nvidia’s verdict on whether tech investors believe the AI boom has legs. If those keys turn smoothly, risk assets may find room to rally; if they stick, the path of least resistance could be a steeper curve and another bout of cross asset rotation.