Trump's 90-Day Tariff Pause: Market Relief Short-Lived Amid Recession Fears

Market Reaction to Tariff Pause

• 📉 Asian stocks declined again on Friday, with Japan's Nikkei index closing down approximately 3% and South Korea's Kospi index dropping about half a percent, despite Trump's 90-day tariff postponement.
• 📈 Markets in China showed resilience, with Hong Kong's Hang Seng index gaining 1% in the afternoon, reportedly due to state fund intervention.

Diplomatic and Negotiation Efforts

• 💬 President Trump expressed openness to negotiating a deal with China, and US Treasury Secretary Steven Mnuchin indicated over 75 countries were seeking talks.
• 🤝 The US and Vietnam agreed to initiate formal negotiations, and Japan's Prime Minister reportedly planned to send a trade task force to Washington.

Lingering Economic Uncertainty

• ⚠️ Investors remain anxious about a potential global economic slowdown, with US duties on China now totaling 145%.
• 📊 Economist Ellie Henderson noted that market uncertainty is far from over, with the 90-day pause offering only a temporary reprieve and the endgame for Trump's tariff strategy remaining unclear.
• 🏦 Concerns about Washington's policy volatility persist, contributing to a flight towards safe-haven assets.

Impact on Safe-Haven Assets

• 🇨🇭 The Swiss Franc reached 10-year highs against the dollar, and gold prices saw gains, reflecting investor caution.
• ⚠️ US government bonds, typically a safe haven, experienced a sell-off, raising concerns about deeper financial system issues and potential forced bond sales to cover losses.