The financial markets started this morning with great calm, with a rebound in stocks, stability in bond yields, and oil regaining its footing.

This movement is based on a struggle between two main narratives, the first of which currently has the upper hand — namely:

The expectations of a less bumpy journey towards a more equitable trading system where the United States receives concessions from its trading partners in a world of generally low tariffs, and the markets receive assistance from more flexible financial conditions as the Federal Reserve implements the four cuts that traders currently foresee.

Conversely,

There are more difficulties ahead as prolonged negotiations continue, with reciprocal tariffs dominating in the meantime, and the Federal Reserve facing constraints due to rising inflation rates, forcing the markets to reprice growth expectations outside the United States.

#economy #markets #tariffs #trade