Greetings from Copenhagen.

The court ruling overnight disapproving the tariffs set by the Trump administration is obviously big news and likely serves as the endgame in the tariff war—which Trump lost, ironically not to the counterparts involved in the trade war, but to his own domestic base of supporters. The court ruling was naturally motivated by political opponents, but more importantly, a handful of small importers within the U.S.—a clear sign that business America has had enough, despite the 90-day pause and the “victorious” trade deal with China.

So, is the trade war definitively over now? Markets at least trade like it is, and we see:

1) A bond sell-off – no tariff revenue, and earlier payments may need to be reimbursed. All fiscal spending from here, in the absence of tariffs, is not funded by any offsetting revenue.

2) Nasdaq and crypto flying – helped by a semi-strong NVIDIA earnings report (especially outside the China segment) relative to consensus, which had been somewhat bearish. Remember that markets are net short/underweight equities to the same extent as in March ’23 (SVB), and the NVIDIA consensus/reaction is a picture-perfect example of that. We will likely see equities continue to reprice higher as fund managers reverse their books/stance.

3) USD rebounding – likely because markets see a lower chance of future trade deals including FX components after this ruling.