Earlier this month, Financial Times columnist Robert Armstrong first introduced the little-known acronym 'TACO', which stands for Trump Always Chickens Out, mocking the president for frequently retreating after initially taking a hard stance. Armstrong suggested that in the face of trade threats from the Trump administration, opposing countries simply need to 'wait and see' to avoid danger.
When the president was directly asked about it at a White House press conference, the TACO acronym began to receive mainstream attention, which naturally was not welcomed by the Trump administration. Perhaps in response to this mockery, the Trump administration's stance clearly became tougher in the latter part of last week, with the China-U.S. tensions escalating to headline news.
Trump accuses China of 'completely violating' the Geneva trade agreement.
Treasury Secretary Bessent criticizes China for deliberately obstructing the export of critical rare earths to the U.S. supply chain.
Trade Representative Greer accuses China of intentionally delaying rare earth export approvals.
Beijing retaliates by accusing the U.S. of 'abusing' semiconductor export controls.
The U.S. government further expands technical licensing restrictions on China's technology industry.
The U.S. Department of Commerce restricts the sale of chip design software and some aircraft engine components to China.
Following the ban on foreign students from Harvard, U.S. Secretary of State Marco Rubio announces the upcoming revocation of Chinese student visas.
Overall, the market clearly shifted to a risk-averse mode in the latter part of last week, even though the volatility of stocks and fixed income has returned to cycle lows, the stock market still failed to break new highs.
Previous concerns over uncontrolled bond yields have gradually eased, with the 30-year Japanese government bond yield falling in sync with U.S. Treasury yields, making it difficult to determine who is leading whom. This further indicates that the recent overall rise in yields is primarily due to de-risking behavior in the fixed income market and concerns about the overall macro environment, rather than specific or structural issues, leading us to be more confident that yields should steadily decline as we enter summer.
Besides the daily tariff news (which the market has begun to take for granted), the overall market sentiment still appears weak, with various assets lacking clear direction. Market focus may shift to the non-farm payroll report later this week to see if it can continue to rise against weakening survey data and economic growth expectations. Considering the recent continued weakness in employment surveys and initial jobless claims data, plus the current high level of the stock market, short-term risks may still lean towards the downside.
In terms of cryptocurrency, despite recent positive news, price performance remains weak, with both BTC and MSTR failing to effectively break through upper resistance, while most mainstream tokens have fallen about 5-10% in the past week.
On a more positive note, Blackrock's IBIT ETF saw a record inflow of over $6 billion in a single month; meanwhile, ETH futures open interest has continued to rise alongside the price rebound in the first quarter, indicating that there are still new long positions entering the market.
On the news front, it is reported that Stripe is 'seriously discussing' plans to use stablecoins for transactions with traditional banks; meanwhile, Trump Media has raised about $2.3 billion through equity and convertible bonds for further allocation in BTC. Furthermore, the SEC has officially withdrawn its lawsuit against Binance (and cannot restart this case), symbolizing the end of a past era in cryptocurrency and the beginning of a new one, although this comes with more involvement from traditional finance and politics.
However, in such a positive environment, BTC still failed to maintain its upward channel last week, and when the market could not respond positively to good news, it serves as an internal warning. Additionally, BTC's recent strength has not been confirmed by cryptocurrency concept stocks; for example, MSTR has not moved upwards in sync, and its leveraged ETF has seen capital outflows, showing a significant divergence from BTC and ETH ETFs.
Year-to-date, BTC has performed outstandingly among all macro assets, but short-term signs indicate that the market may face a more challenging phase, with OG and native users consistently taking profits at highs, while mainstream buying interest takes over.
If macro risks heat up again in the summer, will BTC also experience a correction? Our basic view is that the market may first turn subdued in the second half of the year, no longer experiencing the extreme volatility seen in the first half. Wishing everyone successful trading this week; if possible, please try to avoid opening high-leverage BTC positions.
