Current Financial Market Dynamics: How Assets Are Priced in the Current Macro Environment.

1. Uncertainty Risk Pricing

Gold continues to rise, driven by sufficient momentum, clearly reflecting the uncertainties in the economy, trade, and geopolitics, which keep gold as the preferred safe-haven asset with upward momentum.

The US Dollar Index remains declining, indicating that increased uncertainties in tariffs and policies have elevated the US risk premium.

Short-term bonds (1-year) remain relatively stable, while yields on 10-year and 30-year long-term bonds are rising. The combination of term premium and tariffs has led to increased inflation expectations in the future, stimulating long-term bond yields. However, currently, the main driver of rising yields is the term premium.

It is evident that both the bond and interest rate markets are still digesting the uncertainties caused by Trump's arbitrary tariff impositions.

2. Risk Assets Are in a "Digestive Phase"

Although there was a buffer over the weekend and Monday, the US stock market is still pricing and trading based on Trump's tariffs. However, due to the weekend and Monday's buffer, along with pre-market trading today, the decline after the market opened continued to widen.

Meanwhile, the VIX has risen to around 20, officially entering a high-volatility risk zone. However, the SPHB/SPHQ ratio rebounded slightly from 1.57 at the open.

The risk markets are currently continuing to digest the negative impacts of Trump's tariffs. Although the VIX has broken above 20, the market has not fully entered panic mode. The rebound in the SPHB/SPHQ ratio indicates that after a short-term reduction in high-beta risk, market sentiment is gradually warming.

As the index declines, dragging high-beta asset prices down, some funds may shift from reducing high-beta assets to appropriately buying high-beta assets (such as tech stocks). Currently, US stock risk appetite is weakening but has not shifted into panic or pessimism.

Summary:

The market is still trading around the impact of tariffs. The macro environment continues to face uncertainties regarding the economy, trade, and geopolitics. The current impact of tariffs directly suppresses risk market sentiment.

Tonight, watch whether US stocks can effectively halt their decline and rebound. The market needs to digest the tariff events, but US stocks have not fully turned pessimistic; they are only in a cautious phase. #BTC #ETH