This episode explores the market reactions and potential implications following President Trump's unexpected 90-day pause on most new tariffs. Against the backdrop of recently announced reciprocal tariffs that threatened to raise US average tariffs to unprecedented levels, equity markets experienced volatility and sell-offs, reflecting investor concerns about potential recession and reduced growth. More significantly, the bond market also showed strain, with rising yields and weakening liquidity, indicating a complex and unhealthy market situation. President Trump's subsequent announcement of the tariff delay boosted equity markets, but lingering uncertainties remain. For instance, the episode highlights the question of whether this reprieve is temporary or a genuine de-escalation, and whether markets need to account for slower growth and higher recession risk even with the delay. The analysis suggests that while the tariff relief might be durable for countries other than China, the strained US-China trade relationship will likely persist, impacting supply chains and key sectors like tech hardware and consumer goods. Ultimately, the episode underscores the ongoing uncertainty and the need to closely monitor economic confidence indicators in the coming weeks.
