Greetings from Copenhagen.

It’s safe to say that the tariff-driven, pandemic-like slowdown we expected this week didn’t materialize as planned, with both ISM Manufacturing and NFP looking strong relative to consensus. The NFP print earlier today was as in-line as it could get when factoring in revisions but produced a very interesting market reaction:

Bond yields shot materially higher as the “Fed cutting” narrative is now harder to justify. The Fed needed economic data to weaken fast (and preferably now) to advocate for multiple cuts this year. But the USD didn’t follow yields higher—while equities were celebrating?

From the looks of it, this has turned into a proper risk-on environment, where better macro data results in a weaker USD, higher equity prices, and vice versa. Markets appear to be shrugging off most of the recession risks previously priced in. This should be read as a signal that markets think the worst is behind us and expect trade deals to arrive soon and end the economic vacuum. But is that a feasible assumption?