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This week, global markets are navigating like convoy trucks in a foggy warzone—headlights dim, signals murky, and every trader hoping the lead vehicle doesn’t drive them into a ditch. With the July 9 tariff deadline fast approaching, all eyes are trained on Washington, scanning for signs of escalation or retreat. The path forward isn’t clear, but the terrain is littered with risk.

Asian equities crept cautiously out of the gate Monday, engines idling more than accelerating. Oil prices eased slightly, with positioning reflecting an uneasy balance—OPEC’s output bump was well telegraphed, but the question now is whether that nudge tips crude into heavy oversupply. So far, it feels less like a flood and more like the start of a slow leak.

Currency markets offered little in the way of drama. The dollar held its ground, even as US equity futures edged lower, with the overall tone more indicative of risk management than risk appetite. No one’s running for the hills, but neither is anyone charging the rally ridge.

Traders appear to be leaning into a derivative of the “TACO” trade—Trump Always Chickens Out—a well-worn reflex at this point. But there’s still chatter on the desk about whether this time we actually get served the whole tariff enchilada—hot, heavy, and politically spiced.

Last week’s fiscal bill cleared a key piece off the macro chessboard—bringing clarity on spending and tax. That alone lifts a layer of uncertainty that’s been hanging over markets for months. But trade? That’s still the wild card. The trajectory of US trade policy remains murky, volatile, and politically flammable—far from the kind of visibility risk markets crave.

On Wednesday, the 90-day truce on reciprocal tariffs is set to expire. The base case in most trading rooms? A modest rise in the effective US tariff levels, paired with a few strategic extensions and some new rhetorical heat. However, one thing we can be certain of is that it won’t be clean or uniform. Some countries might be granted more time at the negotiation table, while others are shown the stick. The administration could dial down pressure on allies making “progress,” while ramping it up on holdouts. Vietnam, already inking a partial deal, serves as a potential model for the carrot—and a signal of who might face the stick next.

Markets are bracing for all options. The tiered approach floated by the administration feels like a rerun of April’s “Liberation Day” theatrics: categorize, escalate, negotiate. The aim? Maximum leverage with minimal clarity. And yet, consensus still leans toward another round of kicking the can—just enough progress to avoid a full-on tariff barrage, but not enough to resolve anything structurally.

Still, with inflation softening and supply chains rebalancing, tariffs remain a key macro swing factor. A more aggressive path—an actual enchilada of tariffs—would likely push US growth estimates lower, fuel dovish bets in rates, and reinforce the recent bid in Treasuries. Conversely, a lighter menu or delay would counter current rate cut plays, supporting the dollar and lifting some of the fog from the outlook.

For now, traders are adjusting positions with the caution of someone crossing a minefield in low visibility. No one wants to wear too much directional exposure into an event where the dealer might change the cards mid-hand. This isn’t about being brave—it’s about staying solvent.

Tariffs may have dulled with overuse, their sting softened by time and tactics—but come Wednesday, they could steal the spotlight and hijack the tape all over again.

The View

The Tariff Clock Is Ticking

The tariff clock is ticking louder, and Washington is playing its favorite game—maximum pressure with minimum clarity. Over the weekend, the Trump administration dialed up the heat, sending trading partners scrambling to finalize deals or beg for more time before the July 9 deadline detonates.

Treasury Secretary Scott Bessent made the media rounds, signaling that while the tariff letters are coming, they may not be the final word. Countries still far from an agreement might be granted a three-week reprieve—just enough rope to either seal a deal or hang themselves in the next round of negotiations. “We’re going to be very busy over the next 72 hours,” Bessent warned on Sunday, while Commerce Secretary Howard Lutnick underscored the message: tariffs are locked and loaded for August 1, but the president is still sketching out the rate cards and deals as we speak.

Trump, for his part, said between 12 and 15 countries will receive letters starting Monday, with many others still on the bubble. The implication? Some get the stick, some get a handshake, and others get another spin on the wheel. "I think we’ll have most countries done by July 9 — either a letter or a deal,” Trump said, leaving just enough ambiguity to keep negotiators sweating.

For now, we’re deep into the “boomerang diplomacy” phase—reviving the threat of a return to the higher April 2 tariff levels as a stick to spur movement. Bessent admitted the final sprint is congested, and while some frameworks are inching toward agreement—Vietnam, the UK, even a truce with China—others are dragging their feet. The EU, Japan, India, and South Korea are still grinding through negotiations, with each juggling domestic political constraints and Washington’s unpredictable tempo.

Notably, Bessent downplayed the idea that August 1 is a hard deadline. For those receiving letters, it’s a choice: accelerate talks and avoid the spike, or revert to pre-freeze levels and eat the cost. “If you want to speed things up, have at it. If you want to go back to the old rate, that’s your choice,” he said on CNN, suggesting the White House is more interested in compliance than confrontation—unless, of course, confrontation gets the job done.

Trump’s signature move has always been the art of the asymmetric threat—letters, leaks, and last-minute reversals. So while the market is watching for paper, the real focus is on posture. Whether the letters are binding or just more of the president’s well-worn pressure tactics is anyone’s guess.

Even Vietnam, supposedly one of the done deals, says it’s still working through the details. India, initially thought to be close, has since hardened its stance and hinted at retaliation—particularly over US auto tariffs. South Korea is trying to buy time, floating extensions in a bid to head off a tariff hike on its own car exports. Meanwhile, Thailand is making a late-stage push to avoid a 36% wallop, offering everything from increased US farm market access to more Boeing jets in exchange for leniency.

Cambodia, facing a staggering 49% tariff, says it has a framework agreement in place that will be made public soon. Indonesia, too, is trying to ink a wide-ranging deal covering everything from minerals to defense. Everyone’s trying to get something on paper before the clock runs out.

But let’s be clear—this isn’t about trade policy anymore. It’s about deal optics. Trump is fresh off a major fiscal win, the equity market is hovering at record highs, and the president smells leverage. A fresh wave of reciprocal tariffs now risks reopening a Pandora’s box of investor anxiety, just as markets were regaining their footing. The April rollout of these same tariffs triggered recession fears and sent asset prices into a tailspin, forcing a hasty 90-day freeze at the current 10% baseline.

And here we are—freeze about to melt, policy in flux, and markets yet again stuck pricing the probability of policy whiplash.

Whether this week delivers a string of deals, another round of can-kicking, or the full tariff enchilada, markets are entering the danger zone. Some are betting on TACO (Trump Always Chickens Out) to save the day, but others are starting to hedge for the opposite—a trade war reheated, tariffs served sizzling, and a tape that’s about to get torched.

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