No Day One Tariffs
Parsing the price action and news on Day #1 of Trump 2.0
The news today:
Trump will not impose tariffs on Day One of his second term, and
Trump pumped meme coins for personal gain.
Let’s parse the price action in light of these news items.
1) Pre-Inauguration Setup vs. Today’s Moves
Pre-Inauguration:
Stocks were down
US dollar was up
Commodities (like crude, gold) were up
Crypto was up
This suggests the market was bracing for a more protectionist, immediate-tariff scenario. Investors often buy the dollar when they expect a risk-off environment or looming trade conflicts. Commodities might have run higher in anticipation of supply disruptions or inflationary pressures from tariffs.
Inauguration Day:
Stocks up
US dollar down
Crude, gold, oil all down
Bonds flat
Crypto ends flat after a big intraday swing
The single biggest shift in narrative: No Day-One Tariffs. That’s a near-term relief for risk assets (e.g., equities) and a reason for the dollar to back off (less immediate trade friction or “flight-to-safety” demand). Meanwhile, commodities that had risen on tariff fears (supply chain costs or friction) deflated once that risk was removed.
2) “No Immediate Tariffs” as a Relief Valve
Surface Story: Traders had priced in the possibility of harsh or immediate protectionist measures. When that risk didn’t materialize, it triggered a relief rally in equities: “Buy back the names you sold in case of a Day-One shock.” The dollar, which had been bid up, softened as safe-haven demand eased.
Deeper Context:
Trump’s style is often unpredictable; markets braced for fireworks that didn’t come—at least not yet.
The retreat in commodities (crude, gold) aligns with the view that near-term disruptions to global trade flows or supply chains are on hold.
Bonds staying flat suggests interest-rate markets aren’t sure whether the “no tariff” stance is permanent or if it’s just delayed.
Key Takeaway: The first 24 hours of a new term often set the tone. With no immediate trade-war threat, risk assets get a short-term green light to rally.
3) Reading Between the Lines: “Temporary” vs. “Permanent” Relief
Even though it’s a relief that there aren’t Day-One tariffs, the prospect of future trade tensions will still linger. Trump might see immediate tariffs as less strategic this time around, preferring to keep them as a bargaining chip or to roll them out after other legislative or diplomatic steps.
Market Misread: The market might assume “No tariffs on Day One = No tariffs at all.” That’s not necessarily true. Trump’s pattern in the past suggests trade friction will erupt unexpectedly.
Even though immediate pressure is off, the second-order risk remains: a complacent market might not be positioned for future policy twists.
4) Asset-by-Asset Implications
Equities
Why They Rallied: Relief from a worst-case trade scenario. Plus, a second Trump term typically signals lower taxes, lighter regulation (in some sectors), and a “pro-business” stance.
Non consensus Idea: This rally could be a “relief pop” that might fade if (a) the administration revives tough talk on trade or (b) yields resume their march higher . Short-term, though, equity momentum is up.
US Dollar
Why It Dropped: The immediate trade-war risk receded, so the safe-haven bid unwound. Additionally, a more predictable trade environment can incentivise capital outflows from the U.S. or a rotation into riskier assets abroad.
Non consensus Idea: If the new administration quietly wants a “competitive” dollar to boost exports, USD could stay subdued. But watch for sudden safe-haven flows if global tensions flare again.
Commodities (Crude, Gold)
Why They Fell:
Crude: With no immediate tariffs, the fear of disrupted supply chains or geopolitically driven energy shocks eases. If the U.S. ramps domestic production, it can pressure global oil prices.
Gold: It often rallies on inflation fears or flight-to-safety. With day-one trade tensions off the table (and the dollar down), gold’s safe-haven premium deflated.
Non Consensus Idea: Don’t assume the dip is permanent. If the administration launches big spending or renews trade tensions later, commodities could spike again. This might be the calm before the storm.
Bonds
Why Flat: The bond market sees enough potential policy moves ahead—spending, taxes, Fed pressure—that it’s in “wait-and-see” mode. No immediate tariff means no sudden shock to growth or inflation, so yields remain anchored.
Non Consensus Idea: Bond volatility could be lurking. If new policies spark fiscal expansion or a re-ignition of trade wars, yields could reprice quickly.
Crypto
Whipsaw Moves: A 5% drop in Asia (perhaps anticipating anti-crypto stance or risk-off behavior) followed by a 6% bounce in Western markets, ending flat.
Non Consensus Idea: Trump association with meme coins ($Trump, $Melania) is a bit nothing burger:”;
short-term hype but says little about long-term regulatory stance. Volatility is likely to remain high—stay nimble, watch for policy signals.
5) Bottom Line: A Reprieve, Not a Final Verdict
Relief Rally, But On Thin Ice: Markets were braced for immediate tariffs; they didn’t come. Equities rally, dollar slips—classic short-term euphoria.
Watch for Delayed Policy Surprises: Trump not acting on Day One doesn’t guarantee tariffs or other trade barriers won’t come later.
Volatility Likely Underpriced: Bond markets are too calm, commodities might be incorrectly pricing “all clear,” and crypto’s mood swings show how quickly sentiment can shift.
Non Consensus Opportunity: If the market increasingly prices in a “benign” Trump stance on trade, it sets up for a bigger shock when (or if) new protectionist measures surface. That’s the moment savvy traders might monetise a volatility spike or a sudden flight back to safe havens—be it in bonds, gold, or even the U.S. dollar. In the meantime, keep an eye on quiet signals from the administration’s early-day advisors, tweets, or policy drafts. Sometimes, the real hint isn’t on day one; it’s on day thirty—or day one hundred.