@TIGRIS ASSET MANAGEMENT — Trump tariff delay
Trump Tariff Delay and Market Reaction: Calm or Complacency?
By Tigris Asset Management | May 2025
Markets roared back on Tuesday after President Trump delayed the implementation of 50% tariffs on European imports, opening the door to renewed trade negotiations with the EU. U.S. equities surged, with the Dow closing above 42,000, the S&P 500 nearing 6,000, and the Nasdaq pushing close to 19,200.
But beneath the risk-on momentum, bond yields dropped, gold softened, and signs of underlying economic fragility resurfaced. Add in geopolitical noise, dislocated FX positions, and Nvidia’s earnings on deck — and it’s clear we’re entering a period of headline-driven volatility masked by surface-level stability.
Short-Term: Euphoria and Repricing
- Dow +740 pts, S&P +2.05%, Nasdaq +2.47%
- Consumer confidence data (Conference Board at 98) beat expectations
- Stocks like Tesla (+6.94%) and Nvidia (+3.21%) drove tech leadership
- 30-year Treasury yield down 9bps to 4.943%
- 10-year at 4.44%, 2-year unchanged near 3.98%
This combination — lower yields and surging equities — suggests markets are discounting recession risk while celebrating relief on trade. But is that sustainable?
We think the answer lies in how long the “delay” holds, and whether soft data outperformance can continue to deflect hard data deterioration.
Mid-Term: Dollar Strength, Data Divergence, and Durability Doubts
The U.S. dollar rebounded sharply overnight, driven by:
- Positioning unwind in USDJPY, boosted by Japanese bond market relief
- Month-end USD demand from corporates
- Strength in U.S. equities following positive consumer sentiment
USDJPY rose from 142.40 to 144, with resistance eyed at 145.41. Yet, traders remain cautious. Soft data (consumer confidence) is diverging from hard indicators:
- Durable goods orders fell 1.3%
- U.S. house prices dropped for the first time in two years
This divergence fuels a false sense of resilience. For now, the market sees a reflationary policy mix — tax stimulus, tariff negotiation, and sticky inflation — as bullish. But that same mix may eventually feed higher baseline inflation and weaker growth, particularly if housing and durables continue to roll over.
Long-Term: Inflation Persistence and Sovereign Risk
While markets are focused on Nvidia earnings and the FOMC minutes, we think investors should be watching the evolving currency and bond market signals:
- Gold fell to $3,285 on USD strength but remains in an uptrend as inflation concerns persist. Watch resistance at $3,365.
- The euro slipped further post-tariff escalation; medium-term bullish trend intact, but short-term pressure may intensify if German employment data disappoints.
- In Australia, today’s CPI and the RBNZ rate cut decision will set the tone for AUD and NZD, both of which are struggling despite favorable risk sentiment.
Global central banks remain in an uneasy position: inflation is no longer falling fast enough to cut aggressively, but growth is not strong enough to tighten. In this environment, asset bubbles and FX misalignments are more likely to build, not resolve.
Strategic Takeaways for Investors
Short-Term (1–2 weeks)
- Enjoy the equity pop — but hedge your exposures. Trade optimism is likely temporary.
- Expect volatility spikes around Nvidia earnings and FOMC minutes.
- Use gold dips as buying opportunities if inflation trends reassert.
Mid-Term (1–3 months)
- Focus on data divergence: soft sentiment may stay strong, but hard indicators are deteriorating.
- Position defensively in FX and duration, especially in USDJPY and EURUSD.
- Stay alert to geopolitical catalysts that could reignite volatility (China, energy markets, Middle East).
Long-Term (3–6+ months)
- If Trump’s tariff delays are reversed or extended further, markets may reprice sovereign credibility and fiscal risk.
- Persistent inflation and debt-heavy policies favor real assets and active credit strategies.
- Tech may remain a leadership theme — but valuations will face a serious test in coming quarters.
Final Thought
Markets are celebrating today — but the Trump tariff delay and market reaction should not be mistaken for true resolution. Trade truce headlines are masking a deeper structural issue: a world caught between short-term relief rallies and long-term fragility.
For serious investors, now is the time to separate momentum from conviction.
Conference Board Consumer Confidence
Reuters – Trump Delays Tariffs on EU
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