Macroeconomic Review and Outlook for This Week

1. Market Performance Review

This week, global risk assets experienced a significant decline. In the U.S. stock market, the S&P 500 index fell a total of 10% over two days, marking the largest drop since March 2020. The Dow Jones Industrial Average fell 7.6% for the week, and the Nasdaq entered a technical bear market. The semiconductor sector performed particularly poorly, with the SOXX ETF plunging 16% in a week, the worst performance since 2001. The VIX fear index briefly surpassed 40, reflecting extremely pessimistic market sentiment.

In terms of safe-haven assets, the 10-year U.S. Treasury yield fell sharply by 32 basis points to 3.93%, marking a new low since September 2022. Gold initially rose and then fell, with spot gold prices briefly breaking through the $3000/ounce mark, but subsequently retreated, ending the week down 1.7%. The U.S. dollar index also declined by 1.1%.

There has been a significant adjustment in the commodity markets. Brent crude oil plummeted by 10.4% to $61.8 per barrel, as expectations of increased production from OPEC+ resonate with concerns over demand. Copper prices fell sharply by 13.9%, marking the largest weekly decline since July 2022. Iron ore prices also dropped by 3.1%.

The cryptocurrency market shows a certain hedging attribute. Bitcoin experienced a brief rise at the beginning of the U.S. stock market crash, but then fell back due to a decline in global risk appetite, with an overall drop smaller than that of the U.S. stock market. This reflects Bitcoin's dual characteristics as an alternative asset in terms of hedging and risk attributes.

2. Key Economic Data Analysis

1. Analysis of Tariff Policies

The newly introduced tariff policy exceeds market expectations. A benchmark tariff of around 10% is imposed on traditional allies such as the Five Eyes countries, while higher rates are levied on Asian countries, such as an additional 34% on China on top of the existing 20%, totaling 54%(, 25% on South Korea, 24% on Japan, and so on. The EU is also subject to a 20% tariff.

The political objectives of this policy include: building legitimacy, increasing fiscal revenue to pave the way for tax reduction policies; enhancing negotiation leverage in foreign affairs, and applying pressure for the return of manufacturing to the United States. Its essence is to reconstruct the distribution of domestic and international interests by creating "controllable crises."

Although the policy execution is simple and blunt, it also leaves room for negotiation. Several affected countries have begun to actively negotiate with the U.S. Currently, China's and the EU's countermeasures are the biggest uncertainties, which may lead to an extended game period between the two sides.

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) 2. Analysis of Non-Farm Payroll Data

The March non-farm employment data appears robust on the surface, but there are structural concerns.

• The official unemployment rate is 4.2%, but the U6 unemployment rate is as high as 7.9%.
• The total number of employed persons for January and February has been revised down by 48,000.
• The unemployment rate has risen for two consecutive months.
• The average hourly wage growth continues to slow down.
• Labor participation rate remains low
• Part-time employment decreases, full-time employment rebounds

The statistical methods for data may be subject to human distortion, potentially underestimating the actual weakness of the job market. Overall, signs of declining job quality are accumulating.

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3. Liquidity and Interest Rate Analysis

The SOFR forward rates have clearly declined, indicating that the market expects the Federal Reserve may cut interest rates earlier. The yields on 2-year and 10-year U.S. Treasury bonds have significantly dropped in sync, reflecting the market's pessimism about the economic outlook, entering a "pricing recession" stage.

Federal Reserve Chairman Powell spoke cautiously, acknowledging the risks of stagflation, but did not clearly state a position on easing. Current policy remains in a wait-and-see phase.

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4. Outlook and Recommendations for Next Week

Main risk factors:

1. The uncertainty of tariff countermeasures is high, especially关注 China and the EU's subsequent developments.
2. Economic data lags behind, intensifying the game between policy and the market.
3. The market lacks a "price-setting policy path" and has high structural vulnerability.

The market pricing logic has shifted from "inflationary pressure" to "high inflation + high tariffs → suppressed demand → early recession." The fluctuation of U.S. Treasury yields and risk assets corroborates the pessimistic outlook.

Suggestion:

• Maintain a neutral stance and respond cautiously to market fluctuations.
• Bitcoin has long-term potential as a "dollar liquidity proxy" and will benefit if the Federal Reserve shifts to easing.
• Short-term control of leverage, waiting for policy easing and confirmation of market bottom signals

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