Good morning. As we start the week, markets are reacting to a mix of relief and rising uncertainty. News of tariff exemptions for select tech products, including Apple and Nvidia, helped spark optimism in Friday’s trading, but broader concerns linger around escalating trade tensions, a flight from the U.S. dollar, and ongoing weakness in manufacturing.

The dollar’s decline is drawing fresh scrutiny, with some analysts warning that continued outflows could destabilize U.S. finances. Meanwhile, China appears to be shifting tactics, seeking closer ties with countries hurt by U.S. trade policy. Investors are watching closely for signals from Washington and Beijing that may clarify the trajectory of this trade war.

With corporate earnings continuing and macro risks building, we remain focused on the balance of near-term market drivers and long-term economic implications.

A Flight From the Dollar Could Shake U.S. Finances
The Economist warns that growing global skepticism of the dollar could have serious implications for U.S. borrowing costs. As deficits balloon and political instability rises, international holders of Treasuries may begin to retreat, potentially driving yields higher and complicating fiscal management.
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Xi Jinping Courts America's Trade War Casualties
Amid intensifying U.S.-China tensions, The Economist reports that Xi is seeking to deepen ties with countries disadvantaged by American tariffs. This pivot could bolster China’s geopolitical influence and complicate America’s efforts to isolate Beijing through trade policy.
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Trump Doubles Down on Tariffs Despite Economic Concerns
The WSJ details the political strategy behind President Trump’s latest round of tariffs. Despite market volatility and corporate pushback, the administration sees trade pressure as a winning domestic issue heading into 2026.
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U.S. Stocks Still Too Pricey, Citi Says
Despite recent volatility, Citi downgraded U.S. equities to ‘neutral,’ citing high valuations and macro uncertainty. The bank sees limited upside given current earnings expectations and lingering geopolitical risk.
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Apple, Nvidia Win Tariff Exemptions
In a surprise move, the Trump administration granted tariff exemptions to certain tech categories, including Apple iPhones and Nvidia chips. MarketWatch reports this helped support tech stocks late last week and may signal future carve-outs.
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Dalio Warns of Crisis Beyond Recession
Ray Dalio cautioned that the current global financial turbulence could evolve into something worse than a recession. His comments reflect a growing concern among macro investors that today’s volatility stems from structural rather than cyclical forces.
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Yields Steady After Tariff Exemptions
CNBC reports that Treasury yields have stabilized after last week’s sharp swings, aided in part by optimism surrounding tariff carve-outs. Still, volatility in rates markets remains high, especially with inflation and trade still in flux.
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China Calls Exemptions a ‘Small Step’
Bloomberg highlights China’s reaction to the U.S. tariff carve-outs, calling them an inadequate gesture and vowing to keep pressure on Washington. The rhetoric suggests Beijing is unlikely to view the exemptions as a serious concession.
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Stocks rebounded Friday to cap a volatile week, with the S&P 500 rising 5.7%, the Nasdaq up 7.3%, and the Dow gaining 5%—each posting their best weekly gains since November. Technology and materials sectors led the charge following the 90-day tariff pause for most trading partners. However, China increased its tariffs on U.S. goods to 125% starting Saturday, keeping pressure on global trade sentiment. The University of Michigan’s consumer sentiment index dropped to 50.8, its lowest level in over a year, as inflation expectations jumped to 6.7% for the year ahead. Treasury yields surged, with the 10-year hitting 4.49%, and the dollar extended its weekly slide, though it recovered slightly by Friday’s close.

Earnings season kicked off with strong reports from JPMorgan Chase, Morgan Stanley, and Wells Fargo, each exceeding expectations. Broader S&P 500 earnings growth is projected at 6.4% for Q1, with a forecasted acceleration to 10.5% by year-end. This should support more balanced market leadership and reinforce the case for diversification.

On the inflation front, March’s Producer Price Index (PPI) declined unexpectedly by 0.4% month-over-month, with annual headline inflation easing to 2.7%, down from 3.2% in February. Core PPI also cooled to 3.3% year-over-year. These data, combined with softer CPI earlier in the week, reinforce the view that inflation is moderating. Still, tariffs may introduce short-term price pressures, but we expect these to be temporary.

Gold closed at a record $3,244.60 per ounce, fueled by safe-haven demand and a falling dollar. Oil rebounded modestly, with WTI settling at $61.50 per barrel, though prices remain down for the month. In currencies, the dollar fell below 100 before rebounding, while the euro briefly hit its highest level since 2022. Treasuries capped their worst week since 2001, with yields soaring and market focus now turning to the Fed’s response to tightening financial conditions.

Markets are trying to strike a balance between relief over targeted tariff rollbacks and concern over the broader trajectory of trade, inflation, and the dollar. This week’s earnings reports and macro data will help clarify whether last week’s rally was a turning point—or a temporary reprieve.