The market currently assigns a 17% probability that all of Trump's threatened tariffs on Europe will be implemented by February 1, according to Polymarket data. This sentiment aligns with the "TACO" strategy, where investors anticipate Trump will retract his tariff threats. Deutsche Bank's Jim Reid highlighted potential for increased market volatility, noting past losses from overreactions to similar threats. UBS Chief Economist Paul Donovan remarked that the market's response appears rational, with bond investors seemingly unfazed by the tariff rhetoric.