Oh my God, this is really shocking. Is this true? Everything happened too fast. When the news broke, the trading floor was in an uproar. Everyone was shouting, what's going on? Are the tariffs paused? Is it real?
Trump has conceded.
Trump announced after midnight:
1) A 90-day tariff pause on countries that have not taken retaliatory actions;
2) Raise the tariff rate on Chinese goods to 125%, effective immediately. But he reiterated that he believes a trade agreement will ultimately be reached with many countries, including China.
U.S. Treasury Secretary Mnuchin stated that he (Trump) needed great courage to hold on until now, and this has always been his strategy.
When asked why he backed down, Trump said: 'I think people have crossed the line a bit; they are a little uneasy and a bit scared.'
The market is jubilant, with the stock market experiencing its largest gain since 2008. The S&P 500 surged 9.5%, breaking free from the bear market. The tech-heavy Nasdaq index soared 12%. Historically, some of the best days in the U.S. stock market often cluster near some of its worst days.
Trump later stated in the Oval Office: 'As you can see, the stock market performed well today, hitting a historic high. I hope this situation can continue.'
Goldman Sachs economists retracted their predictions of a U.S. recession. At 12:57 PM (Eastern Time), Goldman Sachs Chief Economist Jan Hatzius released a report titled (Towards the Recession Benchmark). But as Trump announced new news, Goldman Sachs urgently released a report 73 minutes later (Trump announces a 90-day pause; returning to our previous non-recession benchmark).
First of all, Trump made concessions because the sell-off of U.S. Treasury bonds reached his 'bottom line.'
Before this, the dollar, U.S. stock market, and U.S. Treasury bonds all faced sell-offs, with investors losing confidence in U.S. assets, and the safe-haven appeal of the dollar and U.S. Treasury bonds being questioned. Trump's concessions exposed his weaknesses, having been held hostage by the market. Compared to Trump, the Federal Reserve seems more patient; no one can be more patient than the Federal Reserve, whose last period of patience lasted '14 months.'
Second, although this move was aimed at China, the offshore yuan did not decline; instead, it broke through a key resistance (7.36 level), closing at 7.34.
Third, the 90-day pause sounds like good news, but upon reflection, one realizes that 'the market has 90 more days of uncertainty,' and a large group of terrified people may seek to exit after a rise. The crisis is temporarily averted, but what will happen next? Anything can change in an instant because of a piece of news or a tweet.
