Trump's 90-Day Tariff Truce Ignites Market Rally – But What Comes Next?

Yesterday, Trump gave markets a breather by suspending the implementation of reciprocal tariffs for 90 days for countries that do not impose counter-tariffs (which, according to Trump, are many), with the exception of China, which still faces a 125% tariff threat.

📈 On this news, markets rebounded sharply from their local lows, posting double-digit gains. Option volatility dropped significantly, though it remains elevated. Banks that were forecasting a recession just yesterday are now rapidly adjusting their outlooks to more optimistic ones.

So, where do things stand now?

🔹 According to Treasury Secretary Bessent, the proposed tariffs were the maximum, meaning there’s a 90-day window to negotiate better terms — which is a positive development in itself.

🔹 The U.S.-China tariff ping-pong has reached its peak. Tariffs over 100% no longer scare the markets — all eyes are on upcoming negotiations and potential de-escalation.

But where might the next shock come from?

Iran tensions are back in focus.

As everyone was distracted by the "trade war" saga, Trump reminded us of Iran. Geopolitical risks remain high — and as always with Trump, unpredictable.

Markets now shift focus to macro data.

With tariffs on hold, attention turns to their existing effects. Recently, recession fears led traders to price in four Fed rate cuts by year-end. But Powell indicated the Fed isn’t planning cuts unless backed by data.

If GDP growth slows and the labor market weakens while inflation rises, it will be hard for the rally to continue, as markets may revise rate expectations upward.

Key dates to watch:

April 30: Q1 GDP Report

Friday: Inflation Data

Consumer prices may tick up monthly but drop annually (due to high base in March 2024).

Producer prices may rise sharply, but markets may shrug it off, as many firms stocked up before tariffs hit.

Bottom line:

There’s potential for this local rally to continue — but with Trump, optimism can quickly flip to turbulence. Stay alert.