The market has entered the "expected disorder" phase, and multiple risks need to be monitored.

1. Core Judgment: The market has entered the "Expectation Disorder" phase.

1. Non-linear policy path: The government's tariff policy exhibits characteristics of "internal divisions + short-term fluctuations," making it difficult to establish long-term consistency. The repeated policy changes disrupt market confidence and reinforce the "noise-driven" characteristics of asset prices.

2. Soft and hard data divergence: Although hard data like retail sales is strong in the short term, soft data such as consumer confidence has weakened comprehensively. This lagging effect resonates with policy disruptions, making it difficult for the market to accurately grasp the direction of the macro fundamentals.

3. The pressure on central bank expectation management is intensifying: The central bank's statements remain neutral to dovish to prevent the market from pricing in easing too early. The current situation is that inflation is not stable but is being forced down by fiscal pressure, with the core contradiction becoming increasingly acute.

2. Major Risk Outlook

1. Confusion in policy expectations: The most important risk is not "how much the tariffs will increase", but rather "no one knows what the next step will be", leading to a loss of policy credibility.

2. Market Expectation Deviation: If the market believes that the central bank will be "forced to ease" under high inflation/economic recession, it may lead to a "mismatch market" characterized by an expanded credit spread and a rise in long-term interest rates.

3. The economy is on the brink of stagflation: hard data is temporarily masked by a buying spree effect, and the risk of a real consumption slowdown is accelerating.

3. Strategic Recommendations: Focus on Defense and Wait for Market "Mispricing"

1. Maintain defensive structure: Currently lacking systemic reasons to go long, it is advised to avoid chasing highs and heavily investing in aggressive assets.

2. Focus on the structure of the yield curve: once there is a mismatch with the short end declining and the long end rising, it will pose a double threat to overvalued and credit assets.

3. Maintain a bottom-line thinking and moderately reverse positioning: Volatility repricing will bring structural opportunities, but the premise is to control positions and rhythm well.

4. Macroeconomic Review of This Week

1. Market Overview

This week there are only 4 trading days, as the stock market in a certain country is closed for the holiday. The overall market is still in a volatile and fragile structure this week.

Stock Market: The three major indices continued to fluctuate downward this week, with the conflict from trade frictions compounded by the central bank reiterating a "wait-and-see" stance, resulting in overall weak market performance. One index fell by 1.3% on Thursday, marking the first decline of over 1% on record; another index dropped by approximately 2.24% during the week, and a certain technology index saw a decline of over 3%, with technology stocks and the semiconductor sector leading the drop.

Safe-haven asset: Gold continues to rise above $3300 per ounce, reaching a historic high of $3345.35 per ounce on Friday, up about 2.47% from last week.

Commodities: Brent crude oil continues to be weak, but hopes for easing trade frictions remain, and this week it has stopped falling and is rebounding, with prices around $66; copper prices have slightly warmed up this week, currently above $9200/ton.

Cryptocurrency: This week, Bitcoin continues to oscillate within a narrow range of $83,000 to $85,000. Other altcoins are generally weak.

2. Economic Data Analysis

2.1 Progress and Analysis of Tariffs

This week, the government once again boldly declared that a trade agreement with another economy "will be achieved 100%", reinforcing the market's optimistic expectations for a shift towards a "moderate" path in tariff negotiations.

However, from the perspective of internal policy, this optimism may not be solid. According to leaked information, the current suspension of tariffs was actually a suggestion put forward by one minister and another minister taking advantage of the absence of a certain advisor to the leaders. This detail reveals that the cabinet's divisions on the tariff issue are becoming increasingly significant: the finance and business sectors tend to favor moderation, while the core trade hawks still insist on a hardline stance.

This means that the government's tariff policy itself lacks consistency, and its implementation path will exhibit obvious non-linearity and short-cycle oscillation, becoming a continuous inducement for market fluctuations.

From a strategic perspective, it is hoped to achieve four goals through tariffs:

1. Increase fiscal revenue and alleviate the deficit;
2. Promote the return of the manufacturing industry;
3. Lower inflation;
4. Alleviate the trade deficit.

But the problem is that these four objectives are essentially in conflict with each other:

• Raising tariffs increases import costs, which will drive up prices, contrary to "lowering inflation";
• Raising the prices of overseas goods does not automatically mean that manufacturing will return, especially against the backdrop of a deeply intertwined global supply chain.
• Theoretically, improving a trade deficit requires export expansion, but tariffs often trigger retaliatory measures, which in turn suppress exports;
• Moreover, fiscal revenue itself relies on maintaining high import levels, which is contradictory to trade barriers.

It can be said that this tariff logic is more like a "political narrative tool" used to stimulate voter emotions and create a tough impression, rather than a verifiable and sustainable macro-control measure.

For example, in the case of a certain tariff law from 1930: that year, the import tariff rate for more than 2,000 goods was raised to 53%, which quickly triggered global trade retaliation, resulting in the country's exports being halved within two years, the stock market collapsing simultaneously, and igniting a Great Depression that lasted nearly a decade.

Although it is currently unlikely to replicate such extreme tax rates, logically, the two are very similar: both are short-term stimuli for domestic manufacturing using protectionist measures in the context of economic pressure; both overestimate the spillover capacity of domestic policies while ignoring the risk of global retaliation; and ultimately, both could evolve into "self-harming trade conflicts."

Therefore, even if the tariff plan ultimately "falls through"—that is, the tariff rates no longer escalate and may even be partially lowered—it does not mean that its impact on the economy and the market will fade away.

What is most alarming is not "how much tariff to add," but the inability of policies to remain stable and sustainable, leading to a loss of trust in the market.

This will lead to two far-reaching consequences:

• Enterprises are unable to formulate medium- to long-term investment plans, and supply chain decisions have shifted to a short-term focus;
• The market pricing model relies more on sentiment and on-the-spot statements rather than policy paths and fundamental predictions.

In other words, the market will enter the "disorder of expectations" phase: expectations themselves become a source of risk, pricing cycles shorten, and asset volatility increases.

Overall, this tariff policy may not necessarily "break the market", but it will almost certainly "disrupt the market"; the risk lies not in how much the tariff can be increased, but in the fact that no one believes where it will go next.

This is the variable that has the most profound impact on market structure and will be the "uncertainty" that investors and businesses find most difficult to hedge in the future.

2.2 Inflation Expectations and Retail Data

The two key data points to watch this week are the inflation expectations from a certain Federal Reserve and the retail sales data.

After the central bank criticized a consumer survey conducted by a certain university (with significant divergence), a Federal Reserve inflation expectations survey has become an important leading indicator for the market to observe inflation. The basic data for the inflation expectations released this time is as follows:

1. The 5-year inflation expectation has decreased from 3.0% to 2.9%, marking the lowest level since January.
2. The 3-year inflation expectations remain basically unchanged.
3. The one-year inflation expectation has risen rapidly.

These survey data indicate that despite signs of stagflation, the current risk exposure is not significant. However, under the threat of tariffs, consumers have increased their pricing of the risks of economic slowdown and full-blown recession. Specifically, consumers' expectations of unemployment and income growth have worsened, and household income growth expectations have declined. Households are also more pessimistic about their financial situation and credit availability over the next year, with a larger proportion of households reporting that their financial situation is worse than the same period last year compared to the previous time. "Recession expectations" are beginning to permeate consumer psychology and perceptions of liquidity, even though macro data has not yet deteriorated. More importantly, the changes in these trends are highly synchronized with tariff policies, and the short-term "panic buying" may obscure the substantial weakening of consumption.

Despite the increasing risk of economic recession in the soft data from consumer surveys, the lagging nature of the hard data has torn apart the differences between the two.

The retail consumption data released this week is impressive. Seasonally adjusted figures show that the estimated retail and food service sales in March were $734.9 billion, an increase of 1.4% from the previous month and a 4.6% increase from March of last year. In terms of segments, due to the rush to beat tariffs, sales of motor vehicles and daily necessities saw a significant month-on-month increase.

The structural divergence between soft and hard economic data usually occurs during periods of intense policy games and rising market sensitivity cycles. Although the retail data in March looks impressive on the surface, the underlying short-term overdraw, rush for tariff effects, and deteriorating consumer confidence create a strong contrast. This round of "hard strength and soft weakness" in economic manifestations is likely a transitional phase before stagflation/recession.

In the next two months, the market will enter a phase that is highly sensitive to the three variables of policy direction, inflation fluctuations, and consumption sustainability. The real risk does not lie in "poor data," but in "hollow data," which conceals the true rhythm of the downturn in the fundamentals.

3. Liquidity and Interest Rates

From the perspective of the central bank's balance sheet, the broad liquidity this week remains around 6.2 trillion. From the government bond yield curve, it reflects the bond market's views on the current market.

1. Expectations for interest rate cuts have strengthened (mid-term yields have further declined), indicating that the market is more cautious about the economic outlook;

2. Inflation risk repricing (long-term interest rates rising), related to recent commodity price rebounds, tariff threats, and debt ceiling negotiations;

3. The market has switched from the "full-year interest rate cuts + soft landing" pricing path to the "slowing pace of interest rate cuts + rising long-term inflation risks"; the central bank may face the real pressure of "unable to continuously cut interest rates", while fiscal issues and global supply conflicts have also pushed up long-term funding costs.

In simpler terms, the market is warming up to the scenario where "the central bank will be forced to cut interest rates while inflation has not yet been suppressed."

Another event worth noting this week is the remarks made by central bank officials and the public accusations from the government. Market analysis indicates a hawkish stance in the comments, but this may actually be a misinterpretation. From the central bank's perspective, the remarks are largely consistent with the current market situation.

1. As analyzed earlier, this week's data vividly demonstrates the decoupling of soft and hard economic data. With inflation yet to reach the 2% target, managing expectations becomes particularly important. Officials must maintain stable and anchored expectations through more cautious statements, ensuring that the final stretch of inflation reaches its goal smoothly. In other words, before there is any actual weakness in hard economic data, the central bank can only maintain a neutral to hawkish stance to avoid excessive market pricing for rate cuts, which would undermine anti-inflation efforts.

2. The officials' statement mentioned that "there will be no rescue for the stock market." From the central bank's standpoint, this basically meets the requirements for independence, as central banks have historically not intervened in market corrections. However, this does not mean that if this correction spreads to systemic risks, such as a bond liquidity crisis or a financial system stability crisis, the central bank will not intervene and provide assistance.

3. From the government's perspective, its repeated criticism of the slow interest rate cuts has very practical considerations. On one hand, this year the national debt faces a repayment pressure of around 7 trillion, which means that before resolving the debt ceiling, refinancing costs must be lowered. Otherwise, this will further expand the fiscal deficit and exacerbate fiscal pressure. On the other hand, the corporate sector also faces the same refinancing cost pressure. If the yield on 10-year bonds does not decrease further, rising corporate financing costs will directly erode profits, further impacting the entire economy.

V. Macroeconomic Outlook for Next Week