Macro Weekly Report: Tariff Policies Shake Global Markets, Economic Outlook Raises Concerns

1. Market Performance Review

This week, global financial markets experienced severe turbulence. The U.S. stock market suffered heavy losses, with the S&P 500 index plummeting 10% in two days, marking the largest drop since March 2020. Panic spread, and the VIX volatility index briefly surpassed 40. Safe-haven assets showed mixed performance, with U.S. Treasury yields falling sharply, gold initially rising then declining, and the dollar index weakening. The commodity market also faced significant losses, with prices of crude oil and base metals like copper dropping sharply, reflecting pessimistic expectations for global demand.

The cryptocurrency market has not been spared either. Bitcoin's price initially benefited from concerns over the US dollar credit crisis, rising, but then it fell back amid a global sell-off of risk assets, showcasing its complex attributes of "safe-haven + liquidity sensitivity."

2. Analysis of Tariff Policies

The newly introduced tariff policy exceeds market expectations. A minimum tariff threshold of around 10% has been set for traditional allies, while additional tariffs on Asian countries range from 25% to 54%, and the EU faces a 20% tariff increase. This policy is underpinned by strong political motives, aiming to build policy legitimacy, increase fiscal revenue, pave the way for tax reduction policies, and enhance bargaining chips in foreign negotiations, while pressuring the manufacturing industry to return.

Although the tariff strategy seems harsh, it still leaves room for negotiation. Countries like South Korea and Japan have already taken the initiative to engage in tax reduction negotiations with the US. However, China's and the EU's countermeasures have become the biggest risk variable, potentially dragging both parties into a long-term game of chess.

3. Interpretation of Employment Data

On the surface, employment data remains robust, with the official unemployment rate staying low. However, a deeper analysis reveals significant signs of structural weakness in the job market:

• The U6 broad unemployment rate has reached 7.9% and has risen for two consecutive months.
• Employment growth data has been revised downwards.
• Reduction in part-time positions
• Average hourly wage growth slows down
• Labor participation rate remains sluggish

It is worth noting that there are human factors affecting the employment statistics criteria, which may mask the actual situation of declining employment quality.

4. Liquidity and Interest Rate Trends

The SOFR forward rates have clearly declined, reflecting market expectations that the Federal Reserve may cut interest rates earlier. The yields on 2-year and 10-year U.S. Treasury bonds have plunged simultaneously, indicating that the market has fully shifted to a "pricing recession" mode. Federal Reserve Chair Powell's latest remarks lean towards caution; although he acknowledges the risk of stagflation, he has not yet clarified a stance on easing, and the policy direction remains in a wait-and-see period.

V. Future Outlook and Strategic Recommendations

Main Risk Factors:

1. The uncertainty of the escalation of countermeasures in tariff policies, especially the subsequent reactions from China and the European Union.
2. The lag effect of economic data combined with the data gap exacerbates the difficulty of policy-making and market competition.
3. The market lacks a clear and predictable policy path, with significant structural vulnerabilities.

Market pricing logic shift:

• Shift from focusing on "inflationary pressures" to worrying about "high inflation + high tariffs suppressing demand, leading to an early recession"
• U.S. Treasury yields and the volatility of risk assets jointly confirm the market's pessimistic expectations, seeking signals of a policy bottom.

Investment advice:

• Maintain a neutral stance and respond cautiously to market volatility.
• In the long term, Bitcoin may become an alternative to the liquidity of the US dollar, especially if the Federal Reserve shifts to a loose monetary policy, it may benefit.
• Control leverage risk in the short term, waiting for policy easing and confirmation signals of market bottom.