A piece of positive news for the stock market last night came when President Trump paused on big tariffs on countries except for China. Trump raised China’s tariff to 125% and lowered reciprocal tariffs to 10%; both are effective immediately. As for non-retaliating countries, they will be authorized with a 90-day pause.
Given how the strong statement has already accelerated the stock prices positively, Fear index dropped while putting some downward pressure on the GOLD price for a short period. this reflects how the market became more certain—at least for the next 90 days.
The dip and then surge in gold prices to $3,117 per ounce as we speak, also interpreted as a growing confidence in the safe-haven assets followed by a rebound as longer-term uncertainties remain.
So here is the catch:
- A 90-day pause is given time to negotiate, not something set in stone yet. Uncertainty still persists after the deadline.
- The Federal Reserve rate cut in May becomes less possible due to the repricing of 83.6% betting on holding the rate.
- Goldman Sachs lowered the probability of recession from 65% to 45%, aligning with prior non-recession baseline forecasts.
All are positive for the stock market, the US economy, and everyone!
My thought
→ I believe Trump’s intention was to use an aggressive tariff to pull some cold water on the stock market, with the purpose of forcing some reliant exported-company stock to decline and seek back to US production. That is also another reason why he mentioned last time not looking at the stock market, let alone the downfall in recent days. All will help to support their in-house production goal, just as he always repeated in his remark. While this also could be another way of forcing the FED to lower the interest rate with a risk of recession from every corner. Now, things have final
Forward-Looking:
The Consumer Price Index, released tonight, is a key highlight of the week, offering valuable insights into how pricing has shifted as some of Trump’s policies have finally taken effect.
