Switzerland expects that US tariffs will stay at 10% after July 9 during ongoing talks. This is the current understanding, and any future changes might impact the market. Right now, the market isn’t too worried about the tariffs. While they could affect global growth, many believe that possible rate cuts and government spending will help balance the situation. The belief that US tariffs will remain at 10% after July 9 is shaping current market strategies. If this view changes, we could see significant shifts in stocks, currencies, and interest rates, especially in high-risk positions. For now, expectations are steady. Traders seem to be counting on continued policy support to lessen the effects of external challenges. There is a growing confidence in potential rate cuts and government measures to cushion the impact—particularly in areas more sensitive to trade issues. Recent statements from the government show they’re not keen on escalating tensions right now. This helps keep market volatility low, but we should be careful not to become complacent. Traders interested in derivatives should consider how current pricing reflects these assumptions. Volatility remains low, and option premiums show this calmer trend. There are chances for those willing to plan for broader outcomes, especially in the two-to-three month timeframe. If the market remains tight and consensus holds, gamma strategies might be more effective than usual. We’ve observed that short-term implied volatilities aren’t aligning with historical patterns, which could provide entry points for those seeking gains who want better convexity. From a delta-neutral perspective, skew is understated in several markets, especially in Europe and Asia. This is significant. We need to question whether the optimism about offsetting policy is too high. Although more easing is expected, the speed and effectiveness can’t be guaranteed. There are complexities involved, and often there’s a delay between actions taken and tangible results. Considering this, we take a skeptical view of current risk pricing. The low-volatility environment sets the stage for surprises. Even small dislocations could have larger impacts than models predict due to deep-seated assumptions. Traders should ensure their exposure matches these consensus expectations, especially regarding tail-risk hedging. We’ve been closely watching open interest, which now seems heavily reliant on a stable economic outlook. That might not last. A review of tariff policy—even if it’s delayed—could trigger market reactions where liquidity is lowest. If you’re hedging with spreads or box structures, be clear about your exit strategies. Wider ranges and stronger themes might make vertical structures more effective than straightforward calls or puts, particularly when market makers offer attractive terms on options. In the short term, we prefer instruments with clear downside protection, especially when funded through gains from more stable assets.

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