Analysis of Macroeconomic Situation and Impact of Equivalent Tariffs After FOMC Meeting

1. Macroeconomic Review of This Week

1. Market Overview

This week, the performance of risk assets has been mixed, and market sentiment remains cautious.

• The US stock market rose slightly, but overall it remains in a downward trend, with low trading activity. The Put/Call ratio in the options market has decreased, indicating that some funds are beginning to buy the dip.

• In the commodity market, gold continued to rise after breaking through $3000/ounce, copper prices increased by 0.8%, with a cumulative rise of over 11% in the past three months. Crude oil prices remained at $68/barrel, while natural gas prices fell.

• The cryptocurrency market is sluggish, with Bitcoin oscillating around $84,000, lacking upward momentum, and altcoins following suit.

2. FOMC Meeting Analysis

The Federal Reserve has made adjustments at both the strategic and tactical levels:

Strategic level: Adhere to the principle of "data dependence", avoid committing to specific interest rate cut timelines, and maintain policy flexibility to respond to uncertainties.

Three key measures at the tactical level:

1. Adjusting Inflation Expectations Management: Emphasizing the New York Fed's 5-year inflation expectation data, downplaying the University of Michigan Consumer Sentiment Index, and reducing market noise.

2. Reiterate "temporary inflation": downplay the long-term impact of tariffs on inflation, provide policy space for interest rate cuts, and prevent the market from falling into stagflation panic.

3. Adjust the balance sheet contraction ( QT ) rhythm: Although liquidity is sufficient, slowing down QT to hedge against the liquidity shock that may arise from the debt ceiling issue.

3. Liquidity and interest rate market changes

• Liquidity Recovery: Broad liquidity reached 6.1 trillion, outflows from TGA accounts drove liquidity improvement, and the usage of the Federal Reserve's discount window decreased, indicating a relief in market funding pressure.

• Interest Rate Market: Expectations for interest rate cuts remain stable, with a 67% probability of a rate cut in June, and a total of 3 rate cuts expected for the year.

• Bond Market: Short-term interest rates are falling faster than long-term rates, steepening the yield curve, reflecting increased market certainty about interest rate cuts, but doubts about inflation rebound still exist.

• Credit Market: Investment-grade credit spreads are widening, credit risk has slightly increased, market risk appetite has decreased, but there are no signs of systemic risk yet.

2. Macroeconomic Outlook for Next Week

1. The focus of the market is on reciprocal tariffs.

The reciprocal tariffs effective from April 2 will affect market trends:

• Tariff intensity: The level of tax rates and the scope of coverage will affect product prices, inflation, and corporate profits. If higher than expected, it may increase import costs, put pressure on corporate profits, and put pressure on the stock and bond markets.

• Global trade friction: If it triggers retaliation from other countries, it will intensify supply chain tensions, drive up inflation, threaten global economic growth, and may lead to panic selling in the markets, reinforcing the "stagflation trade" logic.

2. Market cautious sentiment continues

• VIX has decreased but the risk signals in the credit market have strengthened, and the market has not yet escaped the panic mode.

• Investors tend to reduce risk exposure and increase holdings in safe-haven assets such as ( gold, government bonds, etc. ).

• Federal Reserve policy direction: If tariffs raise inflation, there may be an earlier tightening of policy, leading to a contraction in liquidity and increased volatility; if inflation is controllable, a continued dovish stance may be adopted to provide a buffer for the market.

3. Strategy Suggestions

The market is still in a phase of uncertainty regarding policy and risk pricing. Short-term strategies should focus on "defensive + flexible offense" as the core, avoiding tail risks while capturing stage opportunities in the market.