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The S&P 500 kicked off the new quarter with a modest gain, closing up 0.38% at 5,633.07 in what can only be described as another jittery, headline-driven session. The Nasdaq Composite outperformed, rising 0.87% to 17,449.89, while the Dow slipped ever so slightly by 11.80 points to finish at 41,989.96. But make no mistake—this wasn’t smooth sailing. The S&P swung nearly 1.7% intraday, down 1% during session lows before surging higher into the close, reflecting a market caught between optimism and tariff anxiety as it awaits clarity on Trump’s looming tariff barrage.

Traders are now firmly in "watch-and-react" mode, with April 2's so-called "Liberation Day" looming large. There's no script for how reciprocal tariffs get priced, and uncertainty is the only constant.

As for economic data? Let’s just say “bad news might be good news” is creeping back into the narrative. Tuesday’s soft ISM manufacturing print slipping into contraction territory and a slightly weaker JOLTS report gave Treasuries a bid and nudged rate-cut expectations higher. The 2-year yield retreated as bets on Fed policy easing were gently repriced.

The tariff cloud is thick, the macro signals are flashing amber, and the market is whipsawing as it tries to make sense of both. Risk sentiment is twitchy, and with Trump’s trade policy reveal just around the corner, the next move might not wait for fundamentals to catch up or down.

Trump is set to drop the hammer—or at least a hefty policy binder—this Wednesday at 4PM EST, as he rolls out the long-telegraphed “reciprocal tariffs” on what he’s dubbed “Liberation Day.” While marketed as a bold recalibration of global trade imbalances, the real question traders are asking is: is this the grand finale of the tariff saga? Highly unlikely. If anything, it’s shaping up to be Act II—with the auto tariffs in March as Act I. And if the matrix of tariff criteria remains vague or sprawling, don’t be surprised if market volatility finds a second gear.

In short: if Trump views tariffs as his ultimate bargaining chip, then this playbook isn’t closing anytime soon. The wildcard now is the tone and delivery.

Interestingly, risk sentiment, the Canadian loonie and Mexican peso both firmed after reports of a “productive” trade call between their leaders—raising hopes that the upcoming measures may be rolled out in a more calibrated fashion. Could that be the canary in the coal mine, signaling a softer landing for key USMCA partners and beyond?

We’ll know more at 4PM EST Wednesday, but for now, the market remains in limbo—positioning on edge, risk bids cautious, and volatility waiting in the wings.

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