Macroeconomic Weekly Report: Market Under Pressure, Follow Equal Tariff Policy

1. Macroeconomic Review of This Week

1. Market Overview

This week, the overall performance of the risk asset market has been weak. Except for gold, which continues to rise, the U.S. stock market, cryptocurrencies, and commodity markets have generally weakened. In particular, after a significant figure made a strong statement regarding auto tariffs, market sentiment clearly deteriorated in the latter half of the week.

The cryptocurrency market is generally calm but with weak momentum. Despite the continued accommodative direction of U.S. regulatory policies, the market is still waiting for new directional guidance amidst poor overall liquidity and existing macro uncertainty.

2. Economic Data Analysis

The latest forecast from the GDPNow model predicts a first-quarter GDP of -1.8%, unchanged from last week. After adjustments, the forecast for actual domestic private fixed investment growth in the first quarter has been revised down from 9.1% to 8.8%.

The labor market shows clear signs of fatigue. Although the number of initial unemployment claims at the beginning of the week was slightly lower than expected, looking at the longer-term data, the unemployment rate is rising in 290 out of 387 metropolitan areas. The number of people continuously applying for unemployment benefits in a certain important region is at the highest level in nearly two years.

February PCE data exceeded expectations, while personal spending declined, reflecting a situation of economic weakness coexisting with high inflation. The rebound in PCE was mainly driven by service costs, with no impact from tariffs.

3. Liquidity and Interest Rates

The Federal Reserve's broad liquidity has slightly improved, maintaining around the 6 trillion level. The yield curve of government bonds shows a clear "bear steepening," with the slope of long-term bonds rising more than that of the short end. The market still has concerns about inflation, and the probability of a rate cut in June has decreased compared to last week.

The credit spreads of high-yield bonds continue to widen, indicating that investors are increasingly concerned about the micro-environmental pressures on companies. This could further squeeze corporate refinancing costs and profits, presenting an unfavorable economic outlook.

2. Macroeconomic Outlook for Next Week

The market's focus remains on the upcoming announcement of the equivalent tariff policy, which will be the biggest variable for the risk market in the near term. If tariffs exceed expectations or face retaliatory measures, it could have a significant impact on the fragile market.

In addition, it is necessary to follow the U.S. unemployment rate and non-farm payroll data next week to further assess the risk of recession.

The current macroeconomic environment presents a combination of "weak economy + sticky inflation + policy fluctuations", putting downward pressure on risk assets. It is recommended to focus on defensive strategies:

1. Appropriate allocation of hedging assets such as gold, U.S. Treasury bonds, etc.
2. For high-valued technology stocks, cryptocurrency assets, and other risk assets, it is recommended to reduce positions or take profits.
3. Even if the impact of tariffs is lower than expected, it does not mean that the market trend has reversed; more macroeconomic benefits are still needed for support.
4. The market is highly vulnerable, avoid chasing highs and selling lows, and strictly adhere to trading discipline.

Overall, the market direction remains unclear, with insufficient upward momentum. Investors need to be patient and wait for clearer signals to emerge.