America Blinks First…

Daily Updates:

• In a sign that President Trump was indeed keeping an eye on the markets, yesterday he posted on Truth Social  that “THIS IS A GREAT TIME TO BUY”. Complementing that message was another post that said “BE COOL” and that “everything is going to work out well."

• Indeed, hours later, the bitter medicine ingested by markets over the past few weeks took a complete U-turn as Trump announced a 90 day pause on reciprocal tariffs on a wide range of countries that were willing to negotiate with the US. For now those countries will only be charged the baseline rate of 10%.

• China was an exception however – the same post stated that “based on the lack of respect that China has shown”, Trump would be raising levies on Chinese imports even higher than the 104% announced earlier this week to 125%.
• The lack of respect Trump was referring to may have been China’s Finance Ministry’s announcement earlier in the day yesterday that it would raise levies on all US imports to 84% starting April 10. 
• China has not been the sole retaliator however – the EU voted to adopt a 25% tariff on a range of US goods worth roughly $23B. Those tariffs will be implemented in a staggered manner: effective April 15 will be tariffs on €3.9B worth of goods including steel, aluminium and motorcycles, then €21B of tariffs from May 16 on poultry, beef and fruit before another €3.5B on soybeans and almonds.

• To say US equity markets soared on the tariff reprieve would be an understatement: the SPX has closed up +9.52% and the Nasdaq-100 finished the session at +12.02%. That’s the best S&P day since 2008 (see below) and the strongest for the NDX since 2001. 
• Following the announcement, outside the White House Trump said “the bond market is very tricky, I was watching it but if you look at it now it’s beautiful … but I saw last night where people were getting a little queasy”.
• The yield on US 2 year treasuries, those more sensitive to Fed interest rate policy, soared 30bps yesterday, briefly exceeding 4%. Fed Funds Futures indicate the market is now pricing in 73bps of rate cuts for the year (just less than three 25bps cuts) compared to over 100 bps on Tuesday.
• 10Y treasuries have also reversed their past 3 days of losses and the 10Y is currently trading at 4.28% from a Wednesday high of 4.5%.

• Crypto markets are also enjoying the current euphoria. BTC is back at $82K, having jumped almost instantly from $78K as Trump announced the 90 day pause. ETH is up even more on the day (currently +9.96%) and SOL is up +8.84%. Interestingly, US equities have jumped with higher percentage changes than the top crypto majors — something we don’t often see. 
• BTC’s term structure inversion has largely abated and the curve is close to flat. That was matched with a huge recovery from the skew towards puts, particularly at the front end. 7-day BTC tenors fell just short of 0% put-call skew from around -10% before dropping back to -3%. 
• ETH’s term structure remains inverted, albeit front-end at vol levels far lower than yesterday. Equally, while the 25delta put-call skew at short tenors is still pricing in a downside premium, skew has relented from its previous extreme put bias. 

• Markets may be rallying, but the March FOMC meeting minutes reflected that Fed officials are becoming more attentive to the risks of stagflation. 
• Almost all Fed officials viewed “risks to inflation as tilted to the upside and risks to employment as tilted to the downside,” according to the meeting minutes.
• Committee members also acknowledged that the Fed “may face difficult tradeoffs if inflation proved to be more persistent while the outlook for growth and employment weakened”. 

• Aave, up +7.1% over the last 24hrs, is launching a structured AAVE buyback and distribution program, following a tokenholder governance proposal. Starting with a $4M aEthUSDT budget to buy AAVE over the next month, this is the first phase of a larger $1M/week 6 month plan aimed at boosting the Ecosystem Reserve.
• Prediction market Kalshi now accepts Bitcoin deposits in a bid to attract more crypto-native users.
• Paul Atkins has been confirmed as the new SEC chair following a 52-44 Senate vote, pending final White House approval. 
• Pakistan is set to repurpose its excess electricity to fuel Bitcoin mining and AI data centers, turning unused energy into economic gain and technological development.

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