April 2026: A Make-or-Break Moment for Global Markets

On March 30, I summarized the four most critical analytical frameworks currently shaping the market. Let me cut to the chase.

Why April Is the Critical Window That Will Determine the Year’s Direction

Back in late 2025, I identified three key dates: January, April, and October 2026. At that time, the war in the Middle East had not yet broken out, and my assessment was based entirely on financial fundamentals. Now, with the added variable of the war, the significance of April has been amplified to the extreme.

The three underlying logics remain unchanged:

  1. The Bank of Japan is highly likely to resume interest rate hikes in April. If Japan and Europe raise rates simultaneously, Japanese and European bonds will be the first to face trouble. The breakdown of the chain of currency swaps and basis arbitrage will directly push up long-term U.S. Treasury yields. Rising risk-free rates will directly crush high-valuation tech stocks, and global capital will shift comprehensively toward real assets.
  2. The U.S. will implement ESLR regulatory easing on April 1—this is the final test before balance sheet expansion. If financial institutions remain unwilling to purchase U.S. Treasuries even after regulatory relaxation, the Fed will have no choice but to expand its balance sheet directly, effectively underwriting both the Treasury and the Department of Defense.
  3. The S&P 500’s 7,000-point level is a hard ceiling. From the low of 4,835 to the key inflection point of 5,557, the difference is 722 points. A 100% gain would reach 6,280, and a 200% gain would hit exactly 7,002. Previously, a 20% pullback was the absolute limit Trump could tolerate, corresponding to 5,557 points.

The biggest difference between now and April 2025 is that Trump has played all his cards. In 2025, he could prop up the market through tariff policies, tax cuts, and pressuring allies to buy U.S. Treasuries, but now none of these tactics work. The market no longer believes his empty rhetoric.

If U.S. troops haven’t withdrawn from the Middle East by the end of April and the S&P drops to 5,557, any subsequent rebound will only form a secondary high before the decline continues. Only a timely withdrawal offers a chance for a pullback after the drop, leading to a wide-range consolidation at high levels.

Microsoft and Meta have already fallen 35% from their highs, approaching the lows seen during the 2025 tariff war. The longer the conflict in the Middle East drags on, the greater the losses for Trump—there is no benefit to be gained. He launched the wrong war at the wrong time, and now his only option is to cut his losses.

Overall Strategy for Major Asset Classes

Gold and Silver: Currently in a corrective phase within an uptrend. Once expectations of Fed balance sheet expansion are confirmed, prices will break through previous highs. The war premium is merely a catalyst; the core logic remains the dilution of the U.S. dollar’s credit.

Oil: Supported by OPEC+ production cuts and war risks, prices will likely fluctuate within the $80–$100 range in the short term. If the situation in the Middle East escalates, a rise to $120 cannot be ruled out, though it won’t last long. High oil prices exert too much pressure on U.S. inflation, and Trump won’t allow them to remain elevated for long.

Coal: The tight supply-demand balance in the domestic market remains unchanged, and a clear upward trend is expected before the summer peak electricity demand period. International coal prices will rise in tandem with energy prices, but domestic prices face policy caps, so expectations should not be too high.

Agriculture: The logic of global food security remains valid. The combination of the Russia-Ukraine conflict, extreme weather, and high fertilizer prices means that prices for staple grains are more likely to rise than fall. Focus on stocks related to seeds and grain trade.

Industrial Metals: Demand faces pressure from the global economic slowdown, while supply is constrained by policies in resource-rich countries. Overall, the market will see volatility and divergence. Demand for base metals like copper and aluminum remains weak, while new energy metals such as lithium and cobalt have already fallen to levels offering long-term investment value.

Three Criteria for a Trump TACO

The market is speculating whether Trump will implement a TACO in April. I offer three clear criteria; if any two are met, it will happen:

  1. Israel launches airstrikes against military targets on Iranian soil, but does not escalate into a ground war.
  2. Oil prices rise above $95 in the short term but quickly retreat.
  3. The S&P 500 falls below 5,800 points, triggering a systemic risk warning.

Note that a “TACO” does not mean a complete withdrawal from the Middle East. Instead, it involves first launching a large-scale airstrike to demonstrate a tough stance, then declaring “mission accomplished” and gradually withdrawing troops. This approach safeguards the interests of the domestic military-industrial complex, provides voters with a satisfactory explanation, and avoids a protracted war that could cripple the economy.

Many believe Trump will remain hardline to the end, but that is a misunderstanding of his core objective. He seeks electoral victory, not military victory. A prolonged war would only cause the stock market to continue falling and lead to voter dissatisfaction. Cutting losses early and shifting the focus back to the economy is the optimal choice.

Two Scenarios for U.S. Interest Rate Hikes

There is currently significant disagreement in the market regarding whether the Federal Reserve will raise interest rates. I have only two clear predictions:

  • If rates are raised: U.S. Treasury yields will surge rapidly, U.S. stocks will fall below 5,557 points, global risk assets will plummet collectively, the dollar will strengthen in the short term, gold will fall before rising, and physical assets will become the sole safe haven.
  • If rates are not raised: The dollar will weaken, risk assets will see a rebound, but inflation will resurface, putting greater selling pressure on long-term U.S. Treasuries, and the problem will ultimately have to be resolved through balance sheet expansion.

The current situation is that the Fed is caught between inflation and financial stability; whichever path it chooses will ultimately lead to monetary easing. The only difference is whether it will inject liquidity directly or first trigger a panic-driven market bottom before doing so.

Trading Strategy Moving Forward

Do not attempt to bottom-fish in April; wait for three clear signals:

  1. Trump announces plans to withdraw troops from the Middle East
  2. The Fed clarifies the direction of its interest rate policy
  3. The S&P 500 tests support near the 5,557-point level

Until these signals materialize, keep your position size below 30%. Prioritize allocations to physical assets such as gold and crude oil, and avoid high-valuation tech stocks. Cash is king—wait for a clear opportunity before acting.