Mark Filipino hosts this FT News briefing covering U.S. market rallies, European Central Bank inflation challenges, and the impact of Trump's tariffs on small businesses.

The episode features Chris Giles, FT economics commentator, discussing ECB monetary policy responses to energy-driven inflation. The second half profiles Princess Awesome, a small clothing company that sued the Trump administration over tariffs, with co-founders Rebecca Melski and Eva St. Clair explaining how trade policies nearly destroyed their business.

Markets Rally Amid Treasury Selloff and Iran Tensions

U.S. stocks surged with S&P 500 up nearly 3% and NASDAQ jumping close to 4% after Trump's Iran comments, marking their biggest one-day gains in over a month

Foreign central banks have reduced Treasury holdings to lowest levels since 2012, with $82 billion sold since February as oil-importing countries like Turkey and India sell U.S. debt to afford higher dollar-denominated oil prices

ECB Faces Energy-Driven Inflation Dilemma

Eurozone inflation jumped to 2.5% in March, up from February and above the ECB's 2% target, driven by Middle East energy shocks

ECB President Christine Lagarde outlined three response scenarios: short shock requires no action, persistent shock needs modest rate hikes, and long shock demands 'appropriately forceful' increases back to 4% levels

"If we expect inflation to deviate significantly and persistently from target, the response must be appropriately forceful or persistent" - Lagarde

Current conditions suggest scenario two with oil at $110-120 per barrel, requiring some interest rate rises primarily to show the ECB is 'on the case and not asleep at the wheel' - Chris Giles

Small Business Battles Trump's Tariff Chaos

Princess Awesome, a quirky children's clothing company, sued the Trump administration after April 2nd 'Liberation Day' tariffs disrupted their global supply chain

"It feels like playing battleship. You don't know if you're going to get hit, and one bad hit could sink us" - Eva St. Clair on tariff uncertainty

The company absorbed $30,000 in tariff costs by cutting salaries and production rather than raising prices, resulting in their lowest inventory levels in 10 years

Co-founders argue tariffs won't bring manufacturing back to the U.S. without government grants, noting they tried domestic production for years but found it inefficient and that 'no one knows how to make clothes here'

Overseas factories have also suffered, with Indian facilities closing during six months of 50% tariffs, creating supply chain disruptions beyond U.S. borders