Analysis: Wall Street is again betting on the Trump-TACO deal, with market forecasts indicating only a 17% probability of tariffs being imposed on Europe.

According to Polymarket data, only 17% of users believe that Trump's threat to impose all tariffs on Europe will take effect on February 1st. This market sentiment reflects the "TACO" (Trump Always Chickens Out) trading strategy, where investors bet that Trump will eventually abandon his tariff threats. Jim Reid of Deutsche Bank pointed out that the market "has more room for volatility," noting that the market has previously suffered losses due to overreacting to tariff threats. UBS Chief Economist Paul Donovan believes the market is behaving rationally, and bond investors do not seem to be taking these threats too seriously. (Fortune)