Add to that the rising worries around some major economies’ ability to finance their ballooning debt and the recent spike in long-maturity sovereign bond yields, and you've got a pretty murky picture.

Even Elon Musk is growing frustrated with Trump’s ‘Big Beautiful Tax Bill’, reportedly saying he realized that the carnage at DOGE — and the hit to his reputation — were simply not worth it. In today’s context, the U.S. deficit is expected to grow by another $2.5 trillion over the next decade. But we’ll likely reach the $40 trillion mark well before that — probably around 2030.

Yet investors couldn’t care less. Dips in equity markets are still seen as opportunities to buy cheaper. And while the data is fun to watch (and sometimes useful to dilute Trump headlines), it remains secondary to the blind bullishness. That’s the takeaway from the post–April 2nd rally: the world may be wobbling, but markets march on.

On the trade and data front, the news is less than ideal. The latest headlines suggest that US–EU negotiations could be getting back on track, but with few details. Meanwhile, US–China talks are going nowhere, with Xi unwilling to talk unless Trump makes concessions.

Trump is visibly frustrated with China’s resilience but China holds a powerful card: rare earth metals. They supply around 90% of global rare earth elements, essential for carmakers and tech producers. These metals aren’t rare like gold or platinum — they’re found in many places, but not in concentrated form. You need to mine and refine them, and China excels at doing that cheaply.

That’s why we all depend on China for these 17 elements, and it’s said that it would take the US 5–10 years to build the necessary refining capacity. China knows it. A restriction in rare earth exports could have serious economic consequences. But Xi isn’t sitting down without real concessions — on tech, on tariffs, you name it. Even the UK, temporarily exempt from the 50% steel and aluminium tariffs, is back at the table — warning that uncertainty isn’t going anywhere.

Markets, for now, are ignoring it. But for how long?

Because yesterday’s ISM services data showed a surprise contraction, and the ADP jobs report was weak — just 37,000 new private jobs last month. Over the past four months, three readings came in under 100K, and one under 50K. Historically, a string of sub-50K prints often signals recession is knocking.

But weak data just boosts rate-cut hopes. Markets now expect two Federal Reserve (Fed) rate cuts by year-end, the first likely in September. The US 2-year yield fell below 3.90%, limiting equity downside — the S&P 500 closed flat.

That’s the magic, right? Good data = optimism on growth. Bad data = optimism on rate cuts.

The only problem is: the Fed says it won’t cut until it sees tariffs affect inflation. That part... goes unheard.

Interestingly, the US dollar is one of the few assets reflecting trade pessimism, and its weakness helps stabilize European inflation. The flash CPI for May suggests eurozone headline inflation dipped below the European Central Bank’s (ECB) 2% target.

That gives the ECB breathing room to cut rates with confidence today — a 25bp cut is expected, marking the seventh consecutive meeting with a cut, and the eighth since early last year. Combined with fiscal stimulus plans, the easing bolsters the European growth story — and the euro. The single currency still needs a strong catalyst to break above the 1.1450/1.15 resistance. But it feels like a matter of time.

Across the Pacific, the Bank of Canada (BoC) paused its rate cuts, but that didn’t stop USDCAD shorts from pushing the pair below a key long-term Fibonacci level — the 38.2% retracement of the 2021–2025 rally. The USDCAD is now consolidating in the long-term bearish zone, with prospects of further downside toward 1.30–1.33.

And that’s despite oil prices coming under pressure. WTI crude remains above its 50-DMA, but is losing momentum. Even escalating tensions between Russia and Ukraine, and a 4 million barrel drop in US weekly inventories, couldn’t drive prices higher. The failure to rally past $64/barrel suggests the recent uptrend may have peaked, and a new wave of weakness may be on the horizon.