How the bond market helped make Trump blink on tariffs: 'I was watching it.'

Key Points

  • President Trump paused reciprocal tariffs due to market turmoil, particularly the bond market's reaction.
  • Long-term Treasury yields surged, with the 10-year yield (^TNX) jumping 60 basis points in three days, the largest since December 2001.
  • Market experts like Kathy Jones from Charles Schwab highlighted the bond market's influence on financial conditions and stock valuations.
  • Warnings from business leaders like Jamie Dimon about a potential tariff-induced recession influenced Trump's decision.
  • Despite a brief market relief, ongoing trade tensions with China and potential foreign investor pullbacks continue to pose risks.

Summary

President Trump's decision to pause reciprocal tariffs was significantly influenced by the bond market's reaction, which saw a sharp increase in long-term Treasury yields. The 10-year yield (^TNX) experienced a dramatic 60 basis point rise over three days, marking the largest such increase since December 2001. This surge in yields, alongside a volatile stock market, prompted Trump to reconsider his tariff strategy, especially after warnings from business leaders like Jamie Dimon about the potential for a tariff-induced recession. Despite a brief market rally following Trump's announcement, the relief was short-lived as investors remained focused on escalating trade tensions with China, which retaliated with high tariffs on US goods. The bond market's role as a safe haven and its impact on financial conditions were highlighted by experts, with ongoing concerns about foreign investors potentially reducing their holdings of US Treasuries adding to market instability.

yahoo
April 10, 2025
Stocks
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