A pause is not enough

The US tariffs continued to send shock waves through the markets, with an epic week that rivals anything seen in March 2020, 2022 or even 2008... Despite the partial activation of the “Trump put” on Wednesday with the 90-day pause decided by the US President, uncertainty remains extreme, while the tariff war between China and the United States is escalating by the hour, as is the risk of a US recession. And the pause does not seem sufficient to mitigate the distrust of dollar assets, as evidenced by the massive steepening of the USD curve at the long end (+48bp for the 30-year UST!) and the fall of the US dollar. Neither the corporate earnings season nor this week’s US macro data are likely to allay fears about tariffs this week. The ECB will cut its rates on Thursday , and all eyes will be on the Fed’s comments if the situation on the markets fails to improve. If there is one lesson to be learned from the last few weeks, it is that everything can change quickly and that anything is possible (even the worst).