> A collision between presidential power and the judicial system is tearing open the undercurrents of global capital flow.
▍Judicial Hammer: Presidential Tariff Authority Faces Historic Restrictions
On May 29, 2025, three judges of the U.S. International Trade Court unanimously ruled that the global tariffs imposed by Trump under the International Emergency Economic Powers Act (IEEPA) were an overreach of power, issuing a permanent injunction. The ruling pointed to the core: 'IEEPA does not authorize the president to issue global, retaliatory tariff orders'—this heavy blow not only denied the legality of 'reciprocal tariffs' but also severed the president's path to unilateral taxation bypassing Congress.
Although tariffs on specific industries like steel have not yet been lifted, the ruling has triggered a chain reaction:
- Government bonds face an epic sell-off: 30-year U.S. Treasury yields break through the psychological barrier of 5%, and 10-year yields soar to 4.50%, surging 10 basis points in two days, creating the largest fluctuation since 2023;
- Stock index futures are partying against the trend: Nasdaq 100 futures surged 1.7%, and Dow futures rose 1.2%, betting that the removal of tariffs will unleash corporate profitability;
- Yen Arbitrage Trading Reversal: The dollar surged 1.5% against the yen in one day, exceeding 146, while the yield on 40-year Japanese bonds surged to a historical peak of 3.689%, sharply increasing the risk of capital repatriation.
▍Bond Market Tsunami: The 'Yield Death Cross' between Japan and the U.S. Looms
This bond sell-off far exceeds conventional interest rate logic, with deep crises hidden in two major fissures:
1. Collapse of Fiscal Credit
The court's ruling exposes the arbitrariness of White House policies, intensifying market skepticism about U.S. Treasury repayment ability. Macquarie analysts warn: when Japan's 40-year bond yields break 3.6%, Japanese investors may accelerate their withdrawal from the U.S. Treasury market, triggering a 'capital repatriation wave.' Currently, Japanese capital holds $1.1 trillion in U.S. Treasuries, and a 5% withdrawal could trigger a $55 billion sell-off.
2. Policy Hedging Failure
The traditional 'Stock-Bond Teeter-Totter' has completely failed—U.S. stock futures and Treasury yields are soaring in sync, reflecting capital voting with its feet to escape dollar assets. Société Générale strategist Albert Edwards bluntly stated: 'Japanese bonds have become a ticking time bomb; if yields continue to rise, it could trigger the apocalypse in global financial markets.'
▍Wall Street's 'Trump Game Manual'
Astute traders have long seen through the essence of the policy farce, with the new strategy TACO (Trump Always Chickens Out) trading becoming the key to winning all bets:
1. Trump announces tariffs → Market crashes → Immediately build positions in risk assets
2. Waiting for the President's 'Tactical Retreat' → Market violently rebounds → Arbitrage exit
Typical Case: Last Friday, Trump threatened to impose a 50% tariff on the EU, causing U.S. stocks to fall in response; when retail investors panicked, hedge funds aggressively bought stock index futures. Sure enough, on Sunday, Trump reversed and said 'delayed until July,' and on Tuesday, U.S. stocks recorded the largest single-day gain of the year, with TACO traders profiting over 15%.
▍Policy Struggle: The White House's Triple Counterattack
In the face of judicial defeat, the Trump administration is breaking through on multiple fronts:
1. Legal Aspect: The Justice Department urgently appeals, arguing that tariff disputes are 'political issues' and should not be subject to judicial intervention;
2. Tech Cold War: Intensifying export controls on chips to China, tightening visas for Chinese students in STEM fields, shifting the focus of public opinion;
3. Asset Defense Battle: The Treasury may initiate 'Twist Operations' (OT), selling short-term bonds to buy long-term bonds to suppress the yield curve.
But the market seems to see through the bottom card—the U.S. Dollar Index stands firm above 100, indicating that capital is viewing the tariff deadlock as an opportunity for dollar credit repair.
▍Crypto and Gold: The 'Safe Haven Paradox' Observed from Afar
When traditional assets are violently shaken, two alternative assets remain unusually calm:
| Asset | Latest Price | Volatility | Capital Flow |
| Bitcoin | $108,282 | Monthly Volatility <8% | Futures Open Interest Down 5% |
| Gold | $3,347/oz | Weekly Fluctuation 2.1% | ETF Holdings Declined for Three Weeks |
Behind this phenomenon of 'safe haven failure' is the smart money's reconstruction of the **pricing logic of geopolitical risks**: when policy risks can be predicted by the TACO trading model, the attractiveness of traditional safe-haven assets diminishes. Gold traders candidly state: 'We need black swans, not calculable farces.'
▍Survival Guide: New Equations for Cross-Market Arbitrage
Astute capital has already laid out three hedging paths:
1. Government Bond Volatility Arbitrage: Buy 30-year U.S. Treasury call options (betting on OT operations) + short 10-year futures (hedging against yield curve steepening)
2. Rotation of Tariff Beneficiary Stocks: Shipping Stocks (COSCO Shipping Holdings) + North American Manufacturing (Caterpillar)
3. Crypto Timing Strategy: Go long on Bitcoin when the U.S. Dollar Index breaks 101 (historical correlation of 0.87)
> History always rhymes: When the court ruled the National Industrial Recovery Act unconstitutional in 1935, the Dow soared 40% in three months. Today, the tug-of-war between judicial and executive powers is once again underway, and capital has long written the script for profit—uncertainty itself is, in fact, the most certain cash cow.
(Note: The market has risks, and decisions should be made independently. The data in this article comes from public information and does not constitute any investment advice.)
