The financial markets began this morning with great calm, as stocks rebounded, bond yields stabilized, and oil regained its footing.

These movements are based on a struggle between two main narratives, the first of which is currently dominant — namely:

Expectations of a less bumpy journey towards a fairer trading system where the United States receives concessions from its trading partners in a world of generally low tariffs, and the markets receiving help from more flexible financial conditions as the Federal Reserve implements the four cuts currently dictated by traders.

On the other hand,

There are more challenges ahead as prolonged negotiations continue, with mutual 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