- U.S. stock markets are holding onto their gains. Why are investors so confident that inflation risk will go away and the Fed will deliver more cheap money later this year? Because of the TACO trade. They seem to be betting that Trump’s tariff levels will go lower and that, in turn, the U.S. Federal Reserve will deliver a cut to interest rates in the fall.
The Dow Jones was up yesterday and although the S&P 500 slipped marginally it has broadly held its gains since President Trump crashed the markets on April 2. This morning, futures are flat—which appears to be a bet that investors do not think U.S. equities will sell off any time soon.
