Did Trump Pull Another Tariff Shock?
Yesterday’s headline‑dropping, “US adds extra tariffs on China,” sent risk‑savvy traders in a frenzy, even though the latest US data still looks solid. The fresh 10% surcharge on China—topping the earlier 10%—mammoth‑adds a 20% tariff on imports from the world’s second‑largest economy.
What Did That Mean for the Market?
The market’s reaction was almost a full‑throttle sell‑off. As news rippled across screens, stocks started firing like a train at a crosswalk. But was it a genuine emergency or a “crying wolf” tactic to squeeze Canada & Mexico for concessions before the tariff deadline on March 4th? Time will tell.
Wiping Off Some Fears
On the bright side, the last quarter’s GDP held steady at an annualized 2.3% and durable‑goods orders climbed 3.1%—beyond expectations. Even though initial jobless claims were a bit soft at 242k (probably because of a nasty New England storm), the markets shrugged it off.
Short‑Term Outlook: A Bit Cloudy
While equities hint at a medium‑term upside, the next few days look murkier. Traders are likely to lighten positions before next week’s chunky lineup of events: tariff deadline, ISM manufacturing & services PMI, and the February US labour report. These will decide whether the growth scare intensifies or eases.
What About Treasuries?
The Treasury curve fell a touch, but with no new catalysts, it feels more like a profit‑take than a fundamental shift. 10‑year yields have slid 20 basis points in the past week, likely because the market is wary of inflation nudges from tariff talk.
Currency Flashpoint
The dollar (DXY) nudged above 107 for the first time in a week, while the Canadian dollar lagged hard. With tariff chatter still gnawing at inflation expectations, the dollar looks to keep rocking the boat.
Today’s Focus
The first big box on today’s agenda is the US PCE inflation data — the Federal Reserve’s choice for long‑term inflation. The core PCE deflator is up 2.6% year‑over‑year in January, the slowest pace since last June, but it doesn’t drastically change the policy outlook.
Other key releases include German inflation, Eurozone CPI, Q4 Canadian GDP, and February’s Chicago PMI report.
What to Keep on Your Radar
- Tariff deadlines – March 4
- ISM Manufacturing & Services PMI
- February US labour market data
- US PCE inflation reveal
- Eurozone CPI and German inflation run‑through
In short, the market’s feeling a mix of caution and curiosity. As tariffs tighten and data comes in, we’ll see if the trend tips toward renewed optimism or rocking the boat further.
