A helpful tariff pause but not a solution for the uncertainty

That was some kind of rally yesterday after President Trump announced a 90-day pause on the reciprocal tariff rate for most countries. China was not in that grouping. Its tariff rate increased to 125% from 104%.

The S&P recorded a 9.5% gain while the Nasdaq Composite recorded a 12.2% gain. The latter was the second-best day ever for the Nasdaq, whereas the former was the third largest single-day gain since World War II, according to CNBC.

That relief rally was undoubtedly catalyzed by short-covering activity, yet most investors will take the gains no matter how they come, given how fast the losses piled up after the April 2 reciprocal tariff announcement. 

Not surprisingly, foreign markets followed suit with big gains of their own. Japan’s Nikkei, for instance, soared 9.1%. 

There is some backtracking this morning, however. That is not surprising. Given the scope of yesterday’s gains, we suspect plenty of participants saw that as a gift that made them close to whole again in terms of the tariff sell-off and are opting to get out knowing that the tariff, economic, and earnings uncertainty was not resolved with yesterday’s 90-day pause (key word) and escalated tariff action for China.

Currently, the S&P 500 futures are down 105 points and are trading 1.9% below fair value, the Nasdaq 100 futures are down 472 points and are trading 2.4% below fair value, and the Dow Jones Industrial Average futures are down 593 points and are trading 1.4% below fair value.

Once again, there is a lot for market participants to take in today, including the NEC Director’s declaration that it will take an “extraordinary deal” for President Trump to lower the 10% global tariff, the EU announcing it is suspending its countermeasures for 90 days to negotiate with the U.S., a disappointing earnings report from CarMax (KMX), a $22 billion 30-yr bond auction at 1:00 p.m. ET, and China reporting a 0.1% yr/yr decline in March CPI.

Other focal points include the data out of the U.S. this morning.

• Total CPI decreased 0.1% month-over-month in March (Briefing.com consensus 0.1%) and was up 2.4% year-over-year versus 2.8% in February. Core CPI increased 0.1% month-over-month (Briefing.com consensus 0.3%) and was up 2.8% year-over-year versus 3.1% in February.
  • The key takeaway from the report is that, while better than expected, it will be discounted as a lasting improvement given the tariff actions that are now taking root across supply chains.
• Initial jobless claims for the week ending April 5 increased by 4,000 to 223,000 (Briefing.com consensus 225,000). Continuing jobless claims for the week ending March 29 decreased by 43,000 to 1.850 million.
  • The key takeaway from the report is that the relatively low level of initial jobless claims remains consistent with an otherwise solid labor market and an economy still in expansion mode.

There was some initial improvement in the equity futures market and Treasury market following the releases, yet that has been mostly stamped out. The 2-yr note yield, at 3.88% before the releases, is at 3.84% now, while the 10-yr note yield, at 4.32% before the releases, remains at 4.32%.

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Originally Posted on April 10, 2025 – A helpful tariff pause but not a solution for the uncertainty