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Radio Silence

Asia opens to an early morning whisper in a thunderstorm—everyone’s hunting for trade clarity, yet radio silence adds static. Side-deals with India, Japan and nimble ASEAN hubs will debut first, but anyone betting on a U.S.–China détente by Day 90 is chasing unicorns—Tariff War 1.0 took 18 months to expire, and this sequel runs deeper, broader and uglier.

Heading into the FOMC, traders were on a risk diet, not a buffet. Soft data had baked in a Fed pivot, but the ensuing hard data prints got bond desks slashing their rate-cut tickets. So long as the real economy hums and fresh levies are expected to spark a second inflation wave, Powell’s hawkish brace stays locked in.

US equities finally blinked, snapping a nine-day win streak with a whimper. The S&P flirted with tying its longest rally since ’95, only to be sold into the close. Small caps and the broad index lugged the laggard tag; the Dow, least-dirty shirt, held the best. Mixed PMIs barely registered against an ISM Prices Paid gauge rocketing higher, yanking year-end cut odds down to just three and zero for next week. June’s off the table; July or September look like the first real easing windows.

Gold rallied above $3,300 as Asia bought the dip, given that trade war uncertainty still runs deep. Meanwhile, crude was steamrolled after OPEC+ green-lit a second 411 kbpd boost into June. The big question remains: will any of this oversupply trickle all the way to the pump?

In FX, Taiwan’s regulator hauling in life insurers shone a spotlight on that blistering TWD ramp—lifers scrambling to hedge USD-bond bets in a not-so-deep-pocket currency cross turned the sell-off into a cannon blast. Yet it could be the canary: ASEAN regulators may have to get used to dancing to a weaker dollar tune as trade-deal quirks take hold.

All eyes are now on Wednesday’s Fed forward guidance. Markets have all but written off June; true easing won’t flash until we see hard economic data rollover, likely pushing cuts into H2. And don’t forget China—olive-branch optics are sweet, but mapping out a 90-day armistice in this scorched-earth tariff fight? That’s nothing short of heroic. Buckle up—this summer’s policy roller coaster will make last year look like a carousel.

U.S. equities have blasted out of their post–Liberation Day trough over the past month, but every rip attracts its skeptics, and the “too far, too fast?” debate is evenly split. The tape is stuck in policy limbo, hanging on whispered breakthroughs in Washington’s bilateral trade talks. Yet, Monday’s surprise tariff salvo on foreign films snapped Wall Street’s nine‐day tear even as Asia and Europe prolonged theirs. Will that derail Tuesday’s Asia follow-through as tariff bolts from the blue often do?

The real fireworks, however, are in ASIA FX: a clutch of Asian currencies logged their strongest rallies in years on murmurs that regulators might tolerate a stronger local unit to sweeten trade‐deal terms. Officially, FX remains off the table, but where there’s smoke, traders know central banks aren’t far behind—either dousing the rally or fanning it to suit their diplomatic playbook.

Without concrete trade deals from D.C., this rally stays tethered to headlines. The next leg will hinge on whichever way the Washington wind—and the FOMC rhetoric—finally blows.

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