Cnn
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President Donald Trump and his advisers said it was the plan from the start: scare the Bejesus out of the world by announcing astronomically high prices, bringing the countries to come to the negotiation table and – with the exception of China – back from the most punishing trade barriers while America is developing new trade agreements around the world.
But the 90 -day break break on its “reciprocal” prices which have never been reciprocal gives its administration only three months to conclude extremely complex trade agreements with dozens of countries which, according to them, line up to negotiate.
The financial markets do not buy it. Actions whipped because volatility has increased. And other markets, including oil, bonds and dollar, send a clear message of deep skepticism that Trump can withdraw this.
After another steep sale Thursday, the actions seemed more calm – for the moment – and fluctuated between the gains and the losses on Friday.
The DOW increased by 450 points, or 1.1%, in the early afternoon. The S&P 500 increased by 1.28% and the NASDAQ was 1.5% higher.
But investors on the stock market has negotiated on the edge of a knife, and any announcement from the Trump administration on the prices has the possibility of sending shares that increase or fall. For example, the actions plunged Thursday after the Trump administration clarified the calculations he had already used to set a massive rate of 145% of China. The street had believed that the price was 125%. The Dow suddenly flowed, at one point down more than 2,000 points.
In 129 years of history of the industrial average of Dow Jones, the index has closed higher or less than at least 1,000 points 31 times. Four of these times occurred last week.
Despite the historic gain on Wednesday after Trump announced his relaxation, the actions remain well below their exchange before the president presents his pricing plan for the “Liberation Day” on April 2.
The bond market acts strangely.
As a rule, you expect the prices for bonds to increase during periods of trouble. US Treasury bills are historically considered as the safest assets, supported by full faith and the American government’s credit.
But the obligations do not increase – they decrease.
This is largely because investors have lost confidence in American trade policy, and they fear that America will still be worse than countries that Trump’s target tariff policy. Like the CEO of JPMorgan Chase, Jamie Dimon, told his annual letter to shareholders on Monday, Trump’s “America First” policy risks alienating his most important partners and the country’s special position in the world.
The yields of the US Treasury, which are negotiated in a direction opposite to prices, jumped Friday above 4.5%. They were less than 4% earlier in the week. This represents a massive decision for the market. Higher yields could harm the American economy, as a number of consumer loans are closely linked to these rates.
“The upward action of rates has been rapid in a historical context and has provided investors in search of paradise in turbulent markets,” said Citi analysts in a note on Friday.
US Treasury bills have been on the right track for their week since 2019, according to the Bloomberg U.S. -Treasury Treasury Employment Index, when the New York Federal Reserve had to intervene and buy treasury bills to reduce a peak of yields caused by liquidity tightening.
“Current market conditions do not require Fed intervention at this stage, but Fed officials are probably monitoring the market function,” said Chip Hughey, CEO of fixed income at Trist Advisory Services.
The oil market is negotiated as if we were going into a recession.
Prices have dropped over the past two weeks, investors, investors feared that Trump’s trade policy could apply for travel, shipping and transport – which all require fuel.
US oil fell at around $ 60 per barrel, almost a four -year hollow. Brent, the world reference, oscillates about $ 63 a barrel, also the lowest since April 2021.
Oil prices have served as a first -rate recession indicator in recent years. The prices dropped after having exceeded $ 100 a barrel for the first time while the great recession settled in 2008. And the prices became negative for the first time during the pandemic when an overabundance of oil became so serious that the traders literally paid storage installations to remove unwanted oil from their hands.
Friday, the dollar dropped at its lowest level in three years. This is the opposite of what you expect when prices are set up.
As a general rule, prices increase the value of a local currency because it encourages residents to buy homemade goods instead of foreign options, further extending their money from other currencies.
But currency traders have sold the dollar because they believe that America will support the weight of the fallout from Trump’s trade war and will end up compared to prices in place.
Friday, the dollar has reached its lowest level against the euro since 2022, and the dollar index – which measures the dollar against a basket of currencies – dropped by 1.1% Friday after the Tanking 2% on Thursday. These are massive movements in the world of currency trade.
“Investors and central banks sell treasury bills and dollars due to a loss of confidence and credibility in American assets,” said Joe Brusuelas, RSM chief economist. “Financial chaos has its cost.”
Meanwhile, gold prices increased above a record of $ 3,200 per Troy Once on Friday. Gold has increased by more than 21% this year and has just published its best quarter since 1986. Yellow metal is considered a safe refuge in the middle of economic and political uncertainty.
Despite the financial markets that have put a huge doubt that the Trump administration can recover the opportunity it has created for itself to conclude bilateral trade agreements with the 150 countries of the world, the Trump administration remains optimistic.
The Treasury Secretary, Scott Bessent, said this week that more than 70 countries had asked to meet US representatives to conclude an agreement that could get them out of Trump’s punitive prices. Although the administration has provided few details on the countries with which it is negotiating, he said that he would first promote allies like South Korea and Japan.
But commercial transactions are incredibly complex arrangements, generally negotiated over the years, not months. And even if Trump was to negotiate trade with all these countries over a short period – whether comprehensive agreements or letters of agreement that have set an agreement together – China, the largest exporter in the world, remains the elephant in the room.
The American prices on China are now at least 145% and China replied on Friday with 125% prices. This will cause enormous damage to the two biggest economies in the world, and the two parties said they are not impatient to retreat.
China has always said that it was open to negotiations, but wants to do it in a way it will be respected. China has ignored America’s warnings not to increase its prices, according to a familiar source with discussions.
In the meantime, economists have not been moved by Trump’s sudden change. Although the negotiated trade agreements are undoubtedly good news for the economy, a large part of the damage has already been caused, supported Wall Street economists. And punish 10% of universal rates remain in place, as are 25% of cars on cars, 25% of prices on certain goods in Mexico and Canada, and 25% of steel and aluminum prices.
This is why JPMorgan and Goldman Sachs say that the probability of the United States and the global economies entering a recession this year are essentially a reversal of parts.
