$USINFLATION - Tariffs are expected to increase US inflation, with core PCE inflation forecast to reach 2.6% by year-end due to higher import costs being passed on to consumers.
$CHINASTOCKS - Chinese markets reacted positively to lower-than-expected tariffs, suggesting potential upside for Chinese stocks.
$NONUS - Non-US equities, particularly in the Euro Area and China, may outperform if severe tariff scenarios are avoided, due to more attractive valuations and potential for risk repricing.
$USDCAD - Pairing long equity positions with dollar upside is recommended for portfolio management in light of tariff risks, suggesting potential strength in USDCAD.
Bearish:
$USD - The US dollar is vulnerable to tariff-related news, as evidenced by its 1.5% strengthening when Canada and Mexico tariffs were imminent, suggesting not all tariff impacts are priced in.
$EUROINFLATION - Tariffs could have a net disinflationary effect in the Euro Area due to slower growth and potential reallocation of Chinese exports, potentially putting downward pressure on core inflation.
$EURUSD - The expected 70 basis point lower growth in the US compared to other economies, coupled with trade policy uncertainty, could imply a bearish outlook for EURUSD.