The stock market is reeling from a rapid-fire series of moves, with yields on government bonds skyrocketing to spark concerns about a financial crisis. The sudden pause in tariffs by President Trump is seen as a reaction to this economic turmoil.
According to four sources close to the president, Mr. Trump’s decision to delay tariffs for 90 days was likely influenced by the rapid rise in bond yields, which may be driven by overleveraged investors and foreign governments selling their bonds. The prospect of slower economic growth, higher inflation, and a falling stock market has led investors to re-price stocks immediately.
The S&P 500 has experienced daily moves of -4.8%, -6.0%, +9.5%, and -3.5% in the past six trading days alone. Wednesday’s giant move higher was the tenth-best day ever for the index, going back to 1928. However, it didn’t last.
The market is moving faster than ever, showing no signs of slowing down. Experts warn that we might be heading into a recession, with some speculating that Mr. Trump’s trade policy could trigger one. The president has privately acknowledged this possibility but wants to avoid a depression.
As the situation unfolds, it’s essential to pay attention to inflation, economic growth, interest rates, and unemployment rates. The current scenario has led to increased uncertainty, and the range of possible outcomes has expanded significantly in the past month.
While some see the recent downturn as a bottom, others wonder if we’re witnessing another forgotten bear market. Historically, down 19% is not a significant difference from a 20% drop. The stock market can be unpredictable, and this picture may not always reflect the actual economic situation.
The ongoing chaos highlights the need for scenario planning and understanding the potential impact on the global economy. As we move forward, it’s crucial to monitor these key indicators to navigate the uncertainty ahead.
Source: https://awealthofcommonsense.com/2025/04/some-early-lessons-from-the-tariff-tantrum