Behind Trump's "surrender," he faces multiple pressures including turmoil in the financial markets, discouragement from business leaders, and frequent warning signals from economic data.

Written by: Zhao Ying

Source: Wall Street Journal

Overnight, the U.S. "stocks, bonds, and currencies" rebounded across the board, with risk sentiment clearly improving. The three major U.S. stock indices rose more than 1%, the dollar index climbed close to 100, and the yield on the ten-year U.S. Treasury bond fell during the session.

Behind this sudden market euphoria, two major concerns in the market over the past few weeks have seen a turnaround: Trump has softened his stance on tariff policies and changed his comments regarding Powell.

According to a report from CCTV News on Wednesday, Trump stated on the 22nd local time that he would "significantly reduce" the high tariffs on China. According to The Guardian, Trump's remarks were a response to U.S. Treasury Secretary Basant's earlier comments on the same day, where Basant stated that high tariffs are unsustainable.

Additionally, on Tuesday, Trump also "backtracked," stating that he does not plan to fire Powell and that now is an excellent time to cut interest rates.

However, behind Trump's "surrender," he faces multiple pressures including turmoil in the financial markets, discouragement from business leaders, and frequent warning signals from economic data.

Discouragement from Business Leaders, Corporate Confidence Collapses

According to media reports on Thursday citing informed sources, Trump abandoned his tough tariff rhetoric the day after meeting with executives from Walmart, Home Depot, and Target. These executives indicated that import taxes could disrupt supply chains and drive up product prices. One informed source noted that Trump seemed to resonate with warnings that store shelves could be empty within weeks.

Moreover, when asked who the president consults regarding tariffs and trade policies, Basant stated that Trump "constantly seeks the opinions of business leaders," mentioning visits from major retailers and revealing that "the three major German car companies also visited on Friday."

It is worth mentioning the reaction from the business community; the pessimism among U.S. CEOs is comparable to that during the financial crisis, with nearly every company lowering its forecasts. Additional data shows that 27% of S&P 500 companies have downgraded their earnings expectations for 2025, while only 9% have raised their expectations.

The collective action of business leaders indicates that the corporate sector is actively lobbying to influence policy direction. However, it is well-known that Trump can easily change his mind, and his stance may shift again.

Frequent Warning Signals from Data: Increased Risk of Hard Landing, Significant Rise in Inflation Expectations

Due to the uncertainty brought about by Trump's tariff policies, Americans' outlook on the economy has deteriorated, with survey data showing a surge in future inflation expectations. Many analysts also hold a pessimistic view of the U.S. economic outlook.

Data from the Institute for Supply Management (ISM) shows that U.S. manufacturing activity contracted last month. The Richmond Fed's manufacturing activity survey for April indicated that overall business conditions plummeted to -30, while the Philadelphia Fed's non-manufacturing survey index fell sharply to -42.7 in April. Data from the New York Fed shows that manufacturing activity in New York contracted for the second consecutive month in April.

Survey data indicates a surge in future inflation expectations. Powell previously stated that the announced tariff increases exceeded expectations, and these tariffs could at least lead to a temporary rise in inflation. He and other Federal Reserve officials have indicated their willingness to maintain interest rates unchanged while waiting for clarity on the tariffs' impact on the economy.

Wall Street analysts have quickly adjusted their economic forecasts, with major investment banks like Goldman Sachs, Morgan Stanley, and JPMorgan Chase all lowering their U.S. GDP growth expectations while raising inflation expectations. The consensus view is that the implementation of aggressive tariff policies will lead to a reduction in U.S. economic growth rates by at least 0.3-0.5 percentage points, while core inflation rates will rise by 0.4-0.6 percentage points.

How the Market Predicts Policy Direction: Focus on These Key Indicators

For investors, predicting policy direction hinges on monitoring several core indicators. Goldman Sachs' latest research found that initial unemployment claims, the Philadelphia Fed manufacturing index, the ISM services index, and the unemployment rate are the best indicators for warning of an economic slowdown. These indicators typically signal a recession just one month after it begins, while hard data like GDP takes four months to show clear signs of weakness.

These indicators perform better than other data because they are released frequently, have small revisions, and can be published earlier. Initial unemployment claims are released every Thursday, and unemployment rate data will be released next week.

Traders should also closely monitor Trump's meeting arrangements with business leaders. Past data indicates that subtle changes in policy tone often occur after such meetings. All of this could provide key clues for future policy direction.

A key question being hotly debated in the market is: Is this a genuine policy shift, or merely a temporary tactical adjustment? Regardless of the answer, one thing is clear: investors need to prepare for a more volatile 2025 than expected.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。