An extension to the 9 July deadline for a previous pause on ‘Liberation Day’ tariffs, now shifted until the beginning of August, is overshadowing the threat of new levies on US trading partners.

Investors seem to be back on the TACO (Trump Always Chickens Out) train for now.

One driver of the latest threats on trade appears to have been prompted by the BRICs trading block condemning unilateral tariffs at a recent summit in Rio de Janeiro.

So far only a handful of trade agreements have been secured. That leaves hundreds of countries yet to declare their hands. 

US secretary of commerce Howard Lutnick has confirmed that the smorgasbord menu of trade tariffs would not come into effect until 1 August, giving countries more negotiating time.

The other knock-on effect of this extension to the deadline, with noises from the administration suggesting it may not be set in stone, is it just prolongs the uncertainty for markets.

Ahead of the latest tariff turmoil, the narrow passage of the ‘Big Beautiful Bill’ through the House of Representatives and its signature on the White House’s South Lawn raised concern about the potential impact on the US deficit. While elsewhere the release of June’s non-farm payrolls revealed the economy added 147,000 jobs, exceeding consensus forecasts of 110,000.

In a note to clients Goldman Sachs Asset Management said: ‘Today’s stronger jobs report confirms a still resilient US labour market, defying, at least for now, the signs of weakness seen in some leading indicators.’

The strong report reflected robust demand in the state government and healthcare sectors. Underscoring the strength, both April and May’s reports were revised upwards by a combined 16,000 jobs.

The closely watched rate of unemployment fell to 4.1% from 4.2% in May, although the headline rate was helped by a fall in the labour participation rate to 62.3% from 64.4%.

Bond yields moved higher across the maturity spectrum with the yield on 10-year treasuries rising to 4.4% from 4.2% before the payroll report was released.

Any hopes of a July interest rate cut were immediately dashed as traders pushed out implied cuts by the Fed to late 2025. The odds of a September rate cut reduced to 64% from 75% at the end of June according to the CME FedWatch tool.

With the S&P 500 trading at all-time highs investors clearly remain in optimistic mood. One way to measure this is CNN’s ‘Fear and Greed’ index which flashed ‘extreme greed’ on 7 July, its highest reading in a year. 

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