Greetings,
The United States: Spooked by surging long-term Treasury yields, the White House has implemented a dramatic set of tariff adjustments. It has temporarily reduced the previously imposed reciprocal tariffs on most US trade partners to a flat 10% for 90 days to encourage negotiations, while sharply raising tariffs on Chinese imports to 125%. A 25% tariff on all steel and aluminum imports remains in place.
Additionally, following the expiration of the temporary USMCA suspension, vehicle tariffs are now likely in effect—potentially imposing a 25% duty on vehicles imported from Canada and Mexico, with the threat of further increases.
While a new 125% tariff on select Chinese goods may appear aggressive, such extreme levels likely yield diminishing returns, as trade volumes collapse and substitution effects intensify—placing the US on the downward slope of the tariff Laffer Curve.
Europe: European bond curves have been steepening.
China: The renminbi hit a multi-year low vs. USD.
Credit: Corporate bond spreads tightened on Wednesday.
Commodities: Here is the commodity market performance on “reversal Wednesday”.
Energy: Brent crude bounced on “reversal Wednesday” but remains below $65/bbl.
Food for Thought: Office-to-apartment conversions in the US:
Edited by Abraham Lent
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