Morning,

As has been the case a few times before with these headline-driven market U-turns by the Trump administration, they rarely prove lasting.

Even though Bessent has de-escalated rhetorically, there’s still little progress on the ground and no actual deals. We might get a surprise “tariff rebate” for China this week or next, but by then it likely won’t catch many off guard. Meanwhile, Xi appears content to sit this one out and let Trump fold.

Gold is trading higher again this morning, and the USD is softening a bit. Our previously strong month-end rebalancing signal to buy USD has mostly evaporated after the past couple of days of USD asset buying. We’re only left with a small GBPUSD short heading into the month-end.

We’re tempted to say that we’re nearing another wave of USD (asset) selling. Even if we applauded Bessent and Lutnick for convincing Trump not to fire Powell, the very fact that such a discussion required an internal meeting underscores the erratic nature of this administration.

A shoutout to Sherwood for the chart below—it’s a tremendous and creative illustration of a dynamic we’ve observed as well. Bessent serves as the “voice of markets” within the administration, while Lutnick—and especially Navarro—are much more aggressive and hostile on trade.

So the question you need to ask yourself is: for how long is Bessent really driving the show? As soon as he appears to lose his grip again, we’re likely back to early April trends.

We’re not fully out of the woods yet.

Chart 1: Who is in the driver’s seat today? Calm and Composure vs. Beavis and Butthead