The announcement of a delayed tariff deadline by President Donald Trump has injected optimism into the financial markets, as traders view it as a potential easing of trade tensions with Canada and Mexico. This delay, now extended to March 1, has alleviated immediate concerns over inflationary pressures that could have been triggered by the tariffs, thereby reducing expectations of rising interest rates. The stable yield curve reflects bond investors' anticipation of a possible exemption process that could further ease trade relations. This positive sentiment has spilled over into the equity markets, with stocks rallying on the news, as the delay is perceived as a less aggressive approach that reduces the risk of an economic slowdown.
The SPDR Portfolio S&P 500 ETF (SPLG) experienced a modest increase, rising 0.70% to $71.66 at 1:00 PM on Friday, January 31.