Morning from Copenhagen.

The market reaction to the tariff proposals from Trump on Friday has so far been much more benign than one would have feared, and both US and European equities are decently bid from the get-go. This is likely due to the fact that we have only seen a few headlines on steel tariffs over the week. China is off to a strong start as well (despite Asia being the most vulnerable region to reciprocal tariffs), while India and Japan are suffering after the steel tariffs announcement – which by the looks of things is somewhat isolated to Japan, India and China as it’s tariffs on finished steel products and not on input such as iron ore etc. 

In general, countries that are already subject to tariffs (China, Mexico, and Canada) are largely priced to be hit less by reciprocal tariffs – and may even be decent bets to shield against them. This explains why price action in these regions is relatively calm today.

Our strongest conviction going into the coming week is that the peak in bond yields is in. High-frequency measures of inflation, such as Truflation, collapsed toward the end of last week, which typically leads market-based measures of inflation, such as inflation swaps and actual inflation, on a trend basis.

Chart of the week: Inflation is coming DOWN