We are now in a 90-day tariff moratorium which means we will see a lot of the “worst case scenario” analysis begin to cool off. The news on the moratorium rallied stocks hard from oversold levels on Wednesday and in the coming weeks we will hear how the 70+ countries will re-set their trading relationship with the United States.
However, China was not included and their tariff rates were ratcheted higher. I posted my thoughts on X (formerly twitter) this week:
The details of these agreements will be significant and may lay the groundwork for changes to military relationships (protection) and rights to precious minerals where China is most dominant.
The first shot on these details came last night (4/11/2025) and will bring a sigh of relief to technology investors and Apple customers as the U.S. Customs and Border Protection (CBP) issued updated guidance on product exclusions from President Trump’s reciprocal tariffs, imposed under Executive Order 14257 and its amendments (EO 14259). The exclusions cover a wide range of electronic devices, including smartphones, laptops, semiconductors, and related components.
So, that should be good news for trading on Monday.
Update On Inflation
We got some relief on inflation this week as the Consumer Price Index (CPI) data for March showed a 0.1% month-over-month decrease, the first monthly decline in nearly five years. Year-over-year, the CPI rose 2.4%, down from 2.8% in February.
The Producer Price Index (PPI) for final demand in March decreased 0.4% month-over-month, against expectations of a 0.2% rise. Year-over-year, PPI rose 2.7%, below the 3.3% forecast and down from February’s 3.2%.
This is good news but it was largely ignored by the markets given all the equity volatility. This gives the Fed leeway to maintain a dovish bias at their next meeting in early May.
The 10Yr Treasury Yield
The U.S. Treasury yield curve experienced notable movements this week influenced by economic data releases, tariff developments, and market volatility. As you can see on the far right, yields made a strong reversal at ‘magenta 2’. The flight to quality from stocks may have ended this week and I have included on this chart a projection of yields pushing higher in the coming weeks/months.
The S&P 500: Is It Over?
As I mentioned in my last post, Planet of the Tariffs, there was the potential for a confluence of support between the 2022 top and a fibonacci retracement that acted as a magnet this week (4824 in the chart). The S&P tagged this level on Monday and promptly rebounded and picked up steam on Wednesday’s news of a 90-day moratorium on the newly imposed tariffs. Also, the Relative Strength Index (RSI) was the most oversold since the 2022 low so a bounce was in the making coming into trading this week.
It is possible that a lasting low has formed so we will see if we get follow-thru next week. Also, earnings will keep things very active for the next three weeks so that will give the market time to focus on the fundamentals, forward guidance and news around the tariffs.
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President, Kisco Capital
