Tariff tango, cliffhanger politics, and the buzzsaw ahead

Markets kicked off the week in familiar territory—grappling with yet another White House tariff cliffhanger. US equity futures caught a modest bid in early Asian trading after President Trump kicked the can on his 50% tariff broadside against the EU, shifting the detonator from June 1 to July 9. Predictably, the futures rally felt more like a reflex than a conviction move—liquidity is always thin heading into a US holiday, and every headline trades louder in the void.

Still, the kneejerk was clear: S&P and Nasdaq contracts floated higher, while the dollar wobbled off its recent lows, and Friday’s safety darlings—the yen and Swiss franc—gave back some of their gains as the risk dial turned ever so slightly toward green. But before anyone breaks out the champagne, remember: this smells like vintage Trump brinkmanship. We’ve seen this movie before—Friday threats, Sunday handshakes, and Monday re-ratings. The administration thrives on cliffhangers; traders merely survive them.

Welcome back to the tariff-and-deficit engagement—no love lost, just rings of consequence. Just when markets had shifted their gaze back toward ballooning U.S. fiscal risks, Trump pivoted and fired a fresh salvo at Europe—this time threatening a tech-specific sledgehammer, including a 25% levy on smartphones if companies like Apple and Samsung don’t bring production stateside. Whether it’s a bluff or a brick through the window, the message is clear: the U.S. is back to reshuffling the global trade deck.

The broader market read? That Trump’s bark will be worse than his bite. Cross-asset pricing reflects an expectation that the eventual tariff landing zone will settle well below the threatened 20-50%, likely in the low teens. But that complacency is a risk in itself. The closer we drift to July 9 without ink meeting paper, the more agitated risk markets will become. Volatility isn’t just a side effect—it’s the asset class.

Meanwhile, the geopolitical stage is expanding fast. ASEAN leaders kick off a two-day summit in Kuala Lumpur, ostensibly focused on trade ties with China and Gulf states. But make no mistake—this is a diplomatic tightrope walk, not a policy parade. China is sending Premier Li Qiang, while the Gulf’s top brass are flying in full force. . For Malaysia’s Anwar Ibrahim, it’s a chance to position the country as a magnet for outbound capital from trade surplus giants looking for safe, strategic deployment.

But ASEAN walks a razor’s edge. China is making it abundantly clear that any pivot toward Washington won’t be cost-free, and ASEAN’s hallmark has always been balancing big-power rivalry without picking sides. Expect plenty of smiles and silence—real deals are done in backrooms, not photo ops.

Back to markets: beneath the macro theater, the calendar is quietly loading up its own traps. This week’s implied move on the S&P sits at 2.07%—and that’s before we get into the meat of it. The US is heading into a holiday-shortened week, but it’s anything but quiet: FOMC minutes Wednesday, second GDP read Thursday, PCE and Michigan sentiment Friday, all anchored by Nvidia’s earnings on hump day. Layer on Senate negotiations around the deficit-exploding tax-and-spend package, and you’ve got a potential volatility cocktail.

As for rates, I remain bullish on US duration. It’s been a whipsaw year—every narrative swing yanks yields higher or lower—but I still think the market is overstating the inflation impulse from tariffs. These are price-level adjustments, not trend-changers. If anything, they’re demand-suppressant taxes with a side of geopolitical premium. In that context, duration starts to look less like a risk and more like a shelter.

We’re not in a trending regime—we’re in a regime of landmines and liquidity traps. Tread carefully. Trade tactically.