Treasuries Dumped, Dollar Dives, Recession Risks Mount
Markets unraveled further on Wednesday as President Donald Trump’s 104% tariff barrage against China took effect, unleashing a wave of crisis-era volatility and accelerating the flight from U.S. assets. The selloff in Treasuries, once the market’s last line of defense, now signals a deeper unease: capital is leaving America.
Bond Rout Sends Shockwaves
- 10-year Treasury yields surged 13 bps to 4.40%, marking a nearly 40-bps jump in just three days—one of the sharpest climbs in a quarter-century.
- A key 10-year bond auction looms today after a weak 3-year auction, raising fears about fading global demand for U.S. debt.
- ING: “This ‘sell America’ trade is dominating the rising recession risk theme.”
“Last week was an equity story—but as ever, it’s now about bonds. And clearly, the plumbing has begun to seize up.”
— Chris Beauchamp, IG
Equities Crushed, Volatility Explodes
- S&P 500 staged one of its worst intraday reversals in decades, swinging 4.2% from green to red, wiping $5.8 trillion in four days.
- VIX soared to 60, the highest since the 2020 COVID panic.
- Europe’s STOXX 600 fell nearly 3% in early trade; since April 1, $1.4 trillion in European market cap has evaporated.
Global Recession Threat Rises
- JPMorgan warns Trump’s tariffs amount to a $400 billion tax hike on U.S. households and businesses.
- The escalating trade war and currency tensions are “disruptive enough to push the global economy into recession.”
- Markets now fully price in multiple Fed cuts, with futures implying a potential cut every meeting through January.
Safe-Haven Stampede, Dollar Cracks
- USD/JPY down to 145.00, USD/CHF slips to 0.8430
- Gold rebounds strongly, up 2% to $3,005/oz
- Oil prices drop 4% as global growth fears outweigh geopolitical risks; Brent crude sits at $61.30/bbl
Conclusion: A Breaking Point
President Trump’s unprecedented 104% tariffs on China mark a watershed moment in global trade policy, sending shockwaves through stocks, bonds, commodities, and currencies. The bond market’s breakdown is particularly alarming—it’s not just volatility, it’s the foundation of the financial system cracking under pressure.
With U.S. economic resilience suddenly in question, the Fed may be forced to respond more aggressively than previously forecast, even as inflation risks simmer beneath the surface. But for now, the market message is clear: risk-off is the new regime.
