Macro Market Weekly Report: Risk Assets Under Pressure, Follow the Implementation of Equivalent Tariffs

1. Macroeconomic Review of This Week

1. Market Overview

This week, risk assets performed poorly as the market continues to wait for the implementation of reciprocal tariffs. Besides gold maintaining its upward trend, U.S. stocks, cryptocurrencies, and the commodity markets showed overall weak performance. Particularly after Trump's strong stance on auto tariffs, the market notably declined in the latter half of the week.

The cryptocurrency market remains relatively calm overall, but the momentum is weak. Despite the United States introducing a new stablecoin regulation bill, the market still needs to wait for a new direction after the implementation of reciprocal tariffs, given the overall poor liquidity and ongoing macro uncertainty.

2. Economic Data Analysis

The latest GDPNow forecast for the first quarter GDP is -1.8%, unchanged from last week. After model adjustments, the forecast for the first quarter's actual domestic private investment growth rate has been revised down from 9.1% to 8.8%.

The labor market is showing signs of fatigue, with unemployment rates rising in 290 of the 387 metropolitan areas in the United States. The number of people continuously applying for unemployment benefits remains high, indicating that companies are facing challenges in their cost-cutting plans.

February PCE data exceeded expectations, but personal spending declined. This reflects a situation where economic weakness coexists with high inflation.

3. Liquidity and Interest Rates

The Federal Reserve's broad liquidity has marginally improved, but remains around 6 trillion. The yield curve of government bonds shows a steepening bear steepening, with the long-term bonds' upward slope higher 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 spread of high-yield bonds continues to widen, indicating that investors are facing increased pressure from the microeconomic environment of enterprises. This may further raise corporate refinancing costs, squeeze profits, and serves as an unfavorable economic forward-looking signal.

2. Macroeconomic Outlook for Next Week

1. Key Variables

The reciprocal tariffs announced by Trump on April 2nd are the biggest variable in the recent risk markets. If the tariffs exceed expectations or provoke retaliation, they could have a significant impact on the fragile market.

2. Focus on

Need to follow the U.S. unemployment rate and non-farm payroll data for March to further assess recession risks.

3. Investment Advice

• Defense first, the current macro environment is unfavorable for risk assets.
• Can moderately allocate to arbitrage-type quantitative funds, gold, US Treasuries and other safe-haven assets
• Reduce the position of risk assets such as overvalued technology stocks and crypto assets.
• If the tariff impact is lower than expected, market risk appetite may improve, but more macroeconomic positive support is still needed.
• Avoid chasing highs and selling lows, strictly adhere to discipline

Overall, the market is still in a pattern of "weak economy + sticky inflation + policy oscillation," and risk assets are facing downward pressure. The future trend depends on the impact of the implementation of reciprocal tariffs and whether U.S. employment data confirms recession risks. In the short term, caution is still needed, and patience is required to wait for clearer signals.