QCP Asia Colour – 26 May 2025 Risk sentiment remains in flux. After a steady climb in risk assets since late April and with the S&P 500 edging toward the symbolic 6,000 mark amid declining volatility, President Trump abruptly reignited trade tensions, proposing a steep 50% tariff on EU goods (up from the previous 20%). The timing has not gone unnoticed, given the market's elevated levels. Markets, however, managed to stabilise after Trump announced an extension of the tariff implementation deadline to 9 July. European equities and U.S. futures opened higher this morning, though the episode serves as a sharp reminder of how swiftly policy risk can reprice calm into chaos. The BTC July to June vol spread, which topped 2 vols last week, has now compressed to under 1, a signal that the market may be bracing for another policy pivot ahead of the new deadline. Inflation continues to frame the macro narrative. All eyes are on this Friday’s PCE print, a critical gauge for the Fed’s next steps. While oil prices have…