QCP Capital: Multiple Factors Contribute to Current Market Volatility Decline as Trade War Countdown Begins

QCP Capital stated in its official channel that, on the macro front, the Federal Reserve kept its benchmark interest rate unchanged as widely expected by the market. However, the policy committee maintained a hawkish stance, emphasizing that short-term inflation expectations remain elevated and identifying tariffs as a key upside risk. Officials reiterated their preference for a wait-and-see approach until the inflation trajectory becomes clearer. The market’s sensitivity to geopolitical headlines continues to decline, including ongoing tensions between Israel and Iran. The countdown to a trade war has already begun. As the July 9 deadline for the EU tariff suspension approaches, the US has reached only one agreement among nearly 195 potential trading partners. Negotiations have stalled, leaks have become routine, and the market’s reaction to incremental tariff news is increasingly muted. The following time points remain crucial: July 14: The EU plans to impose retaliatory tariffs on the US; August 12: The 90-day US-China tariff truce ends; August 31: China’s long-term tariff exemptions on imported goods expire. These dates could trigger periodic declines and volatility in risk assets. However, QCP’s baseline scenario remains relatively optimistic: given the overlapping interests of both sides, US-China trade talks are more likely to reach a stable outcome, which would support a continued rally in risk assets. Currently, the market risk reversal indicator remains negative (put option premiums exceed call option premiums), reflecting cautious positioning and expectations of a short-term pullback.