Economic Flashpoints: What to Watch for Market Volatility in Late March 2025

This week, spanning March 24 to March 28, 2025, a slate of economic data releases promises to inject fresh uncertainty into already jittery markets. With U.S. policy shifts under the Trump administration—particularly tariff threats—clouding the outlook, and the Federal Reserve balancing growth concerns against persistent inflation, these events could trigger sharp moves across equities, bonds, and currencies. Here’s a refined look at the key catalysts, enriched with additional data, and their potential market impacts.

Key Economic Events to Watch

1. Flash Purchasing Managers' Index (PMI) Data (Monday, March 24)

• Details: S&P Global’s Flash PMI surveys for manufacturing (prior: 46.8, consensus: 47.2) and services (prior: 51.6, consensus: 52.0) provide an early March pulse. February’s composite PMI hit 49.9, a 17-month low, signalling contraction below 50.

• Why It Matters: A further slide—say, manufacturing to 46.5—could amplify recession fears, especially with tariffs threatening supply chains. A rebound above 50 might temper slowdown bets but question Fed rate-cut odds.

• Market Impact: Weak PMIs could drag the S&P 500 below 5,600 and push 10-year Treasury yields under 4.1% as safe-havens rally. Strong data might lift yields to 4.3% and nudge the DXY toward 105.

• Volatility Potential: High. Markets are sensitive to growth signals right now, especially amid tariff-related uncertainty. A weak reading could spark a sell-off, while a robust one might shift sentiment toward a hawkish Fed outlook.

2. Consumer Confidence and Sentiment Surveys (Tuesday, March 25)

• Details: Conference Board’s Consumer Confidence (prior: 95.1, consensus: 96.0) and University of Michigan’s Sentiment (prior: 68.9, consensus: 69.5) are due. Inflation expectations rose to 2.8% in February’s Michigan data.

• Why It Matters: With consumer spending (68% of GDP) softening—February payrolls at +140K versus 180K expected—a drop below 94 or a jump to 3% inflation expectations could signal stagflation risks.

• Market Impact: A miss might sink consumer discretionary ETFs (XLY -2%) and drive gold past $3,050/oz. An upbeat surprise could steady the Nasdaq 100 near 19,800 but pressure bonds if inflation heats up.

• Volatility Potential: Moderate to High. A significant miss versus expectations (e.g., below the 96.0 consensus for March per some forecasts) could trigger risk-off moves, especially in consumer discretionary stocks.

3. Q4 2024 GDP Revision (Thursday, March 27)

• Details: The second Q4 GDP estimate (initial: 1.3%, consensus: 1.4%) revises December’s figures. Growth slowed from Q3’s 2.8%, with consumption dipping to 2.1% from 3.5%.

• Why It Matters: A cut to 1.1% could lock in slowdown fears, especially if business investment (down 1.2% in Q4) weakens further. A rise to 1.6% might ease concerns but stoke inflation bets.

• Market Impact: A softer print could pull the S&P 500 to 5,500 and drop yields to 4.05%. A stronger revision might lift yields to 4.35% and boost the Russell 2000 by 1%.

• Volatility Potential: Moderate. While not a real-time indicator, a surprise here could shift longer-term market outlooks, impacting bond yields and equity valuations.

4. Personal Consumption Expenditures (PCE) Inflation Data (Friday, March 28)

• Details: Core PCE (prior: 2.6% YoY, consensus: 2.6%) and headline PCE (prior: 2.3%, consensus: 2.4%) are the Fed’s inflation benchmarks. January’s core monthly rise was 0.2%, below forecasts.

• Why It Matters: A climb to 2.8% could slash 2025 rate-cut odds (from 75 to 50 basis points), reflecting tariff-driven pressures. A fall to 2.4% might cement three cuts, boosting risk assets.

• Market Impact: Hot data could spike yields to 4.4%, tank Nasdaq 100 to 19,400, and lift DXY to 106. A cool print might push the S&P 500 toward 5,800 and weaken yields to 4.0%.

• Volatility Potential: Very High. This is the week’s marquee event. Markets have priced in two to three 25-basis-point cuts for 2025, but a hot PCE print could flip that narrative, sparking sharp moves across asset classes.

5. Durable Goods Orders and Weekly Jobless Claims (Wednesday, March 26, and Thursday, March 27)

• Details: Durable goods orders (prior: -0.1%, consensus: +0.4%) and jobless claims (prior: 223K, consensus: 220K) are key. Core capital goods orders fell 0.3% in January.

• Why It Matters: A drop to -0.5% in durable goods could signal tariff hesitancy, while claims above 230K might hint at labour cracks (February unemployment at 4.2%).

• Market Impact: Weak orders could hit industrials (XLI -1.5%) and nudge gold to $3,100. Rising claims might cut yields by 5-10 basis points and soften the DXY to 103.5.

• Volatility Potential: Moderate. These are secondary indicators, but surprises—especially on the downside—could amplify reactions to other data points like PCE.

Broader Context

Markets are tense: Trump’s tariff talk (e.g., 10% universal tariffs) looms large, the Fed held rates at 4.25%-4.5% on March 19, and equities are wobbly—S&P 500 down 3.1% last week, Nasdaq in correction territory. The DXY at 104.167 reflects a softer dollar, while gold’s surge to $3,021.40 signals risk-off flows. CME FedWatch shows a 70% chance of a June 2025 cut, but surprises could shift that fast.

Market Implications

• Equities: The S&P 500 (5,667.56) risks a slide to 5,500 if PMI or PCE disappoints; an upside to 5,850 needs soft inflation. Nasdaq 100 (19,753.95) could test 19,500 or rally to 20,000.

• Bonds: 10-year yields (4.15%) might range from 4.0% (dovish data) to 4.5% (hawkish), with the 2s10s curve steepening on growth signals.

• Currencies: DXY (104.167) could hit 106 on hot PCE or dip to 103 if cuts solidify.

• Commodities: Gold ($3,021.40) may climb to $3,100 on risk-off moves; oil (WTI $68.28/bbl) could fall to $65 if demand falters.

Conclusion

Friday’s PCE data is the week’s wildfire, with the power to torch or turbocharge Fed expectations. Monday’s PMIs will light the fuse, while consumer confidence and GDP revisions could fan the flames. With the S&P 500 at 5,667.56, Nasdaq 100 at 19,753.95, DXY at 104.167, and gold at $3,021.40, markets are primed for turbulence. Sector shifts—tech and industrials in the crosshairs—and cross-asset swings will test traders. In this data deluge, precision pays.

@TigerWire