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New York, July 6 EST: As the clock runs down on the July 9 tariff deadline, markets are doing… nothing. Stocks are holding near record highs, volatility is muted, and bond markets are focused more on rate cuts than trade policy.
It’s not that investors don’t care about tariffs anymore. It’s that they’ve seen this movie before—and they don’t expect a new ending.
“The market has gotten much more comfortable, more sanguine, when it comes to tariff news,” said Jeff Blazek, portfolio manager at Neuberger Berman. Translation: we’ve priced it in.
Tariffs? Already in the Rearview
Back in April, the initial “Liberation Day” tariff shock knocked global equities down 14%. But since then, the same markets have bounced back 24%, erasing losses and powering into fresh territory.
Why the resilience? Because traders learned the lesson: headlines and deadlines aren’t the same as enforcement. The July 9 date matters, but most believe the actual reapplication of tariffs will be staggered, softened, or quietly deferred.
It’s not complacency. It’s pattern recognition.
Bonds and the Dollar Tell a Different Story
While equities are shrugging, other corners of the market are showing strain. Treasury yields are drifting higher, and the dollar is sliding fast.
The U.S. dollar index is down about 11% year-to-date—the worst performance since 1973. That’s not just about trade—it’s a referendum on Washington’s fiscal stance.
Trump’s $3 trillion tax-and-spend package, passed earlier this year, is beginning to weigh on bond sentiment. The deficit is growing, the Fed is pivoting slower than expected, and rate cut bets are thinning.
Markets are less worried about China retaliating—and more worried about inflation sticking around.
Trade Talks: Some Progress, Lots of Unfinished Work
The White House has quietly struck partial deals with Britain and Vietnam, but negotiations with India, Japan, and the EU are still open.
That lack of clarity would normally rattle markets. This time, traders are betting on the “soft deadline” playbook: make noise, miss the date, and work out the details later.
There’s still risk—especially if the administration surprises with sudden, across-the-board tariff hikes. But for now, investors aren’t paying to hedge it.
What’s Actually Moving Markets
While headlines scream “Tariffs!”, buy-side desks are watching CPI prints, earnings outlooks, and Fed guidance.
With the Fed now expected to cut rates just twice this year, down from four cuts priced in this spring, the bigger concern is cost of capital—not cost of goods.
And that’s the real reason Wall Street isn’t flinching. Tariffs might dent trade. But Fed policy shapes portfolios.
As one portfolio strategist put it: “Tariffs are a headline risk. Rates are a balance sheet risk.”
What Could Change That?
Markets may be relaxed now, but they’re still paying attention. If the tariff reinstatement hits supply chains—or shows up in inflation data—it could shift sentiment fast.
For now, though, the consensus is clear: the tariff drama may make political noise, but it’s not making markets move.
That could change. But not until it shows up in the data.
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