Macroeconomic Weekly Report: What is the Impact of the Reciprocal Tariff Policy?

1. Market Review of This Week

1. Market Performance Overview

This week, the global market experienced significant fluctuations due to the unexpected tariff policies:

• U.S. stock indices generally fell sharply, with the S&P 500 index dropping a cumulative 10% over two days, the Dow Jones down 7.6% for the week, and the Nasdaq entering a technical bear market.
• Safe-haven assets showed mixed performance, with government bond yields declining, gold rising then falling, and the US dollar index weakening.
• Commodities plummeted significantly, with crude oil down 10.4% and copper prices down 13.9%.
• Cryptocurrencies exhibit complex characteristics, with Bitcoin rising initially when tariff policies were introduced, followed by a decline in line with risk assets.

2. Important Economic Data Analysis

2.1 Interpretation of the Equal Tariff Policy

Content and Impact of Tariff Policy:

• A benchmark tariff of about 10% on traditional allies, in line with expectations.
• Imposing tariffs of up to 25-54% on Asian countries, with the EU imposing 20%, exceeding expectations.
• The policy objectives include increasing fiscal revenue, strengthening negotiation leverage, and promoting the return of manufacturing.
• The countermeasures by Central and Eastern Europe are the biggest uncertainty and may lead to a long-term game.

2.2 Analysis of Non-Farm Employment Data

Structural weakness in employment data:

• The official unemployment rate is 4.2%, but U6 is as high as 7.9% and has risen for two consecutive months.
• Employment growth has been revised down, and part-time positions have decreased.
• Average hourly wage growth has slowed, and the labor participation rate remains low.
• Data statistics are subject to human distortion, leading to a decline in employment quality.

3. Liquidity and Interest Rate Trends

• SOFR forward rates have clearly declined, indicating market expectations for the Federal Reserve to cut interest rates earlier.
• The yields on 2-year and 10-year government bonds fell in tandem, reflecting the market's pessimism about the economic outlook.
• Federal Reserve Chairman Powell is cautious, acknowledging the risk of stagflation but not clearly indicating easing.

2. Outlook for Next Week

Main Risk Factors:

1. The uncertainty of tariff countermeasures has escalated, especially regarding the strategies of China and the European Union.
2. The lagging response of economic data and the data gap exacerbate the policy and market games.
3. The market lacks a clear and predictable policy path, with pronounced structural vulnerabilities.

Market Pricing Logic Shift:

• Shift from "inflationary pressure" to "high inflation + high tariffs → demand suppressed → early recession".
• The yield on government bonds and the volatility of risk assets jointly confirm pessimistic expectations and the pursuit of a policy bottom.

Investment advice:

• Maintain a neutral stance and respond cautiously to market volatility.
• Closely monitor the Federal Reserve's policy direction; if it shifts towards easing, Bitcoin may benefit.
• Short-term control of leverage risk, waiting for policy easing and confirmation of market bottom signals.