CNN
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President Donald Trump and his advisers said this was the plan all along: Scare the bejesus out of the world by announcing astronomically high tariffs, get countries to come to the negotiating table, and — with the exception of China — back away from the most punishing trade barriers as America works out new trade agreements around the globe.
But Trump’s 90-day pause on his “reciprocal” tariffs that were never actually reciprocal gives his administration just three months to strike enormously complex trade deals with dozens of countries that it says are lining up to negotiate.
Financial markets aren’t buying it. Stocks have whipsawed as volatility has spiked. And other markets, including oil, bonds and the dollar, are sending a clear message of deep skepticism that Trump will be able to pull this one off.
Following another steep sell-off Thursday, stocks appeared calmer — for now — and posted strong gains Friday.
The Dow ended the day higher by 619 points, or 1.56%. The S&P 500 rose 1.81% and the Nasdaq was 2.06% higher. Markets were buoyed by Boston Federal Reserve President Susan Collins telling the Financial Times Friday that the central bank would step in to support financial markets if there were signs of distress.
But stock market investors have been trading on a knife’s edge, and any announcement coming from the Trump administration on tariffs has the ability to send stocks surging or tumbling. For example, stocks plunged Thursday after the Trump administration clarified the math it had already used to set China’s massive 145% tariff. The street had believed the tariff was 125%. The Dow sank sharply, at one point falling more than 2,000 points.
In the 129-year history of the Dow Jones Industrial Average, the index has closed higher or lower by at least 1,000 points just 31 times. Four of those times happened in the past week.
The S&P 500 fell by just over 9% across the first week of April, its biggest one-week drop since March 2020. The benchmark index gained 5.7% this week, its biggest one-week gain since 2023.
Despite Wednesday’s historic gain after Trump announced his detente, stocks remain well below where they were trading before the president presented his “Liberation Day” tariff plan on April 2.
The bond market is acting weirdly.
Typically, you’d expect bond prices to rise throughout periods of turmoil. US Treasuries are historically considered to be the safest of safe assets, backed up by the full faith and credit of the US government.
But bonds aren’t rising — they’re falling.
That’s largely because investors have lost faith in US trade policy, and they fear America could get hurt even worse than the countries Trump’s tariff policy is targeting. As JPMorgan Chase CEO Jamie Dimon said in his annual letter to shareholders Monday, Trump’s “America First” policy risks alienating its most important partners and the country’s special standing in the world.
US Treasury yields, which trade in opposite direction to prices, briefly surged on Friday above 4.5%. They were under 4% earlier in the week. That represents a massive move for the market. Higher yields could hurt America’s economy, as a number of consumer loans are closely tied to those rates.
“The upward action in rates has been rapid in historical context and has provided no comfort to investors looking for havens in turbulent markets,” analysts at Citi said in a Friday note.
US Treasuries were on track for their worst week since 2019, according to Bloomberg’s US Treasury total return index, when the New York Federal Reserve had to step in and purchase Treasuries to bring down a spike in yields caused by a liquidity crunch.
“Current market conditions don’t require Fed intervention at this point, but Fed officials are likely monitoring market function closely,” said Chip Hughey, managing director for fixed income at Truist Advisory Services.
Dimon said Friday on an earnings call that he expects there will be a “kerfuffle” in the Treasury markets that would lead to the Federal Reserve intervening.
“They’re not going to do it now … they’ll do it when they start to panic a little bit,” Dimon said.
The oil market has been trading like…
Read More: Trump has 90 days to do 150 trade deals. Financial markets aren’t buying it