Macroeconomic Weekly Report: Market Under Pressure, Follow the Implementation of Reciprocal Tariffs

1. Macroeconomic Review of the Week

1. Market Overview

This week, risk assets fluctuated as the market continued to watch for the implementation of reciprocal tariffs. Apart from gold, the U.S. stock market, cryptocurrencies, and the commodity market overall weakened. After Trump took a tough stance on auto tariffs, the market clearly deteriorated in the latter half of the week.

The cryptocurrency market is generally calm but lacks momentum. Although the U.S. House of Representatives has introduced a new bill regulating payment stablecoins, the policy easing has not immediately reversed the market slump. Against the backdrop of poor liquidity and ongoing macro uncertainty, the market still needs to wait for the implementation of reciprocal tariffs to provide new direction.

2. Economic Data Analysis

The GDPNow model predicts that the GDP for the first quarter will be -1.8%, unchanged from last week. After adjustments, the model takes gold imports and exports into account, and the forecast for the growth rate of real domestic private investment has been revised down from 9.1% to 8.8%.

Multiple indicators show a clear trend of economic weakening in the United States, but there are no clear signs of recession yet. The labor market is showing significant fatigue, with rising unemployment rates in 290 metropolitan areas. The number of people continuously applying for unemployment benefits in Washington D.C. has reached a new high since 2021.

February PCE data exceeded expectations, primarily driven by service costs. At the same time, personal spending month-on-month fell short of expectations, reflecting a situation of economic weakness alongside high inflation.

3. Liquidity and Interest Rates

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

The credit spread of high-yield bonds continues to widen, indicating that investors are increasingly concerned about the pressures in the corporate microenvironment. This could further squeeze corporate refinancing costs and profits, which is an unfavorable economic forward signal.

2. Macroeconomic Outlook for Next Week

1. follow key points

• On April 2, Trump announced reciprocal tariffs, which is the biggest variable in the recent risk market.
• U.S. unemployment rate and non-farm payroll data, further assessing recession risks

2. Investment Advice

• Focus on defense, avoid chasing highs and cutting losses.
• Can moderately allocate to arbitrage quantitative funds, gold, U.S. Treasury bonds, and other safe-haven assets.
• Reduce positions in high-valuation technology stocks, cryptocurrency assets, and other risk assets or lower stop-profit levels.
• If the impact of tariffs is lower than expected, market risk appetite may recover, but a greater macroeconomic benefit is still needed to support a trend reversal.

The current market is still in a pattern of "weak economy + sticky inflation + policy oscillation," with risk assets facing dual pressure. The future direction of the market depends on the impact of reciprocal tariffs and whether employment data confirms recession risks. In the short term, it is still necessary to remain cautious and patiently wait for clearer signals.