Investors are navigating choppy waters this week as global markets react to escalating trade tensions and await key policy decisions. Here’s a breakdown of the current financial landscape.

Global financial markets experienced heightened volatility on Tuesday, May 6, 2025, as investors grappled with escalating trade tensions and awaited clarity from the Federal Reserve’s upcoming policy decision.

Stocks Slide Amid Trade Deal Uncertainty

U.S. stocks took a hit on Tuesday. The Dow dropped nearly 390 points. The S&P 500 and Nasdaq weren’t spared either, both down around 0.8%.

The reason? Investors are tired of waiting on trade deals that just aren’t materializing, especially with China.

The Fed’s upcoming decision is only adding to the anxiety. Nobody wants to make a big move before knowing whether rates are staying put.

The Dollar Sinks, the Euro Rallies

The U.S. dollar is feeling the heat too. It fell against major currencies as traders braced for more trade drama.

Meanwhile, the euro got a boost after Germany’s Friedrich Merz snagged the chancellor seat, on his second try. With the dollar sliding, investors are looking for safe places to park their cash.

Treasury Yields Slide on Strong Bond Demand

Bond buyers showed up in force. A 10-year Treasury auction was so strong, yields dropped across the board.

That’s usually a sign that investors are playing it safe, expecting uncertainty ahead and grabbing long-term government debt instead of risky assets.

Oil Rebounds After a Brutal Monday

Oil prices bounced back more than 3% after plunging to four-year lows the day before. Why the sudden rebound?

Signs of stronger demand in Europe and China, a little less production in the U.S., and, of course, those never-ending Middle East tensions.

Gold Spikes as Panic Builds

Gold, the classic haven, is having a moment. Spot gold shot up 2.6% to over $3,421 an ounce, and futures climbed even higher.

People are rushing into precious metals as they wait to see if the Fed drops any surprises and as tariff threats continue to swirl, especially around pharmaceutical imports.

The markets are in a weird, nervous limbo. No one’s sure what comes next: more tariffs, a surprise Fed signal, or a trade war with China? Buckle up. This week could get bumpy.