Seeds of Wisdom RV and Economic Updates Wednesday Afternoon 4-9-25

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DRAMATIC SELL-OFF OF US GOVERNMENT BONDS AS TARIFF WAR PANIC DEEPENS

US government bonds, traditionally seen as one of the world’s safest financial assets, are suffering a dramatic sell-off as Donald Trump’s escalation of his tariff war with China sends panic through all sectors of the financial markets.

The falls suggest that as Trump’s fresh wave of tariffs on dozens of economies came into force, including 104% levies against Chinese goods, investors are beginning to lose confidence in the US as a cornerstone of the global economy.

UK bonds also came under pressure from investors, who sent the cost of financing government borrowing to its highest level since 1998, heaping further pain on Rachel Reeves as the chancellor struggles to prevent her budget plans from being wrecked by a panic on global markets.

The yield – or interest rate – on the benchmark 10-year US Treasury bond rose to 4.516% on Wednesday before slipping back to 4.451%, up 0.14 percentage points on the day. This week it has undergone the three biggest intraday moves since Trump was elected in November. Yields move inversely to prices, so surging yields mean falling prices as demand drops.

The move in the 30-year bond was more dramatic. The yield briefly jumped above 5% to its highest since late 2023 and was last trading at 4.899%, or 0.12 percentage points higher than Tuesday.

Both yields came down from their highest levels, however, after a much-anticipated $39bn (£31bn) US bond auction later in the day met market expectations.

“This is a fire sale of Treasuries,” said Calvin Yeoh, a portfolio manager at the hedge fund Blue Edge Advisors. “I haven’t seen moves or volatility of this size since the chaos of the pandemic in 2020,” he told Bloomberg.

Analysts believe the US Federal Reserve may need to step in. Jim Reid, at Deutsche Bank, said: “Markets are pricing a growing probability of an emergency [interest rate] cut, just as we saw during the Covid turmoil and the height of the GFC [global financial crisis] in 2008.”

UK bonds came under severe pressure after the US moves. The yield on a 30-year UK gilt hit 5.65%, surpassing a previous 27-year high of 5.472% set in January.

Shorter-dated 10-year gilt yields were slightly higher at 4.78%, while two-year yields ticked down to 4%.

Higher yields on gilts – UK government bonds – will make things even more difficult for Downing Street, as it will raise the cost of borrowing to fund investment.

China’s intransigence in the face of escalating US tariffs appeared to indicate that the world’s two largest economies were heading for a showdown, with an outcome that analysts said was difficult to predict.

“When challenged, we will never back down,” said China’s foreign ministry spokesperson, Lin Jian. The commerce ministry said: “China will fight to the end if the US side is bent on going down the wrong path.” Beijing has promised further countermeasures.

It was not clear whether China, which is one of the world’s largest holders of Treasuries, included among its policy changes the sale of those bonds, accelerating the sell-off and the US administration’s financial pain.

Global stock markets suffered another tumultuous day as the tariffs took effect.

Japan’s Nikkei benchmark index fell almost 4%, while Taiwan’s benchmark stock index was 5.8% lower. Hong Kong’s Hang Seng index recouped some earlier falls to close 0.4% down, and South Korea’s Kospi 200 index dropped by 1.8%.

However, China’s stock markets rose, appearing to weather the storm after government interventions. The SSE composite index in Shanghai ended the day 1.1% higher, while the Shenzhen SE composite rose 2.2%.

In Europe, the major markets also fell back. In London, the FTSE 100 dropped by 3% on Wednesday, immediately undoing the gains on Tuesday. Germany’s Dax index dropped by about 2.3%, leading to a 16% drop since 18 March, while France’s Cac 40 fell by 3.3%. Spain’s Ibex index was down by 2.2%.

@ Newshounds News™
Source:  MSN

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TRUMP'S 90-DAY TARIFF PAUSE SENDS BITCOIN BACK TO $81,000

▪️President Donald Trump has paused tariffs for 90 days and lowered reciprocal duties to 10% for most countries.

▪️Markets immediately bounced on the news — bitcoin reclaimed $81,000 while equities trotted higher.
▪️Analysts had said Wednesday’s FOMC minutes may spur a “dead cat bounce” and herald a potential multi-week recovery.

The tit-for-tat trade escalation between China and the United States once again reverberated throughout global financial markets and cryptocurrencies on Wednesday — but prices surged this time.

Bitcoin jumped 5% in minutes to trade above $81,000 as President Trump responded to China's escalation by increasing tariffs on the Asian giant to 125%. The largest cryptocurrency by market cap had dropped below the $80,000 mark following the implementation of the president's tariff plans on Sunday, April 6.

In the same beat, Trump announced a 90-day pause for import duties on other countries and reduced reciprocal tariffs to 10% in the interim. "Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately," Trump wrote on Truth Social, a social media platform he owns.

"I have authorized a 90-day PAUSE and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately," the President added, noting that over 75 countries had engaged the U.S. in commerce negotiations.

Crypto markets and equities immediately skyrocketed following the news. Ether flew 7% to hit $1,580, according to The Block's price page. Major altcoins like Solana and XRP posted double-digit bounces as the total cryptocurrency market flipped green, rising above $2.6 trillion. The GMCI 30 recorded an 8% uptick as the top 30 digital currencies by market cap soared, according to The Block’s data page. Data from Yahoo Finance showed similar price action in U.S. markets. The S&P 500, DOW Jones, Nasdaq, and Russell 2000 all rose more than 5% shortly after President Trump's post.

Dr Kirill Kretov, senior automation expert at CoinPanel, told The Block that bitcoin and crypto’s amped volatility was unsurprising, considering sudden price swings in more established markets. "Even traditional markets are behaving like memecoins," Kretov said. "Just look at the recent S&P 500 spike of +8% on fake news, followed by a -3.5% correction within minutes. If that’s the new normal for tradfi, why would we expect bitcoin to behave differently? Especially with how thin and easily moved the crypto market is right now."

Relief from macro data

Minutes from the March Federal Open Market Committee meeting to be released Wednesday afternoon may spark a market recovery, Darren Chu, contributing analyst at BRN, had said before Trump's latest jab at China. Also, Thursday’s Consumer Price Index and Friday’s Produce Price Index data could offer a clearer picture of U.S. inflation, which are key factors for the Federal Reserve’s future decisions on monetary policy.

"Odds are moderate and rising for a multi-day to multi-week Dead Cat Bounce to begin as early as today 2 pm EST with the release of the US FOMC meeting minutes, or by Thursday with the US CPI and unemployment claims, or Friday with the US PPI and preliminary UoM consumer sentiment and inflation expectations," Chu said.

U.S. Federal Reserve Chairman Jerome Powell previously said the central bank would respond to hard data rather than sentiment and was in no rush to pivot its policy stance. Powell also cautioned President Trump’s tariff maneuvers, warning that economic repercussions like higher inflation and cooling growth rates might arise.

@ Newshounds News™
Source:  The Block

Minutes from the March Federal Open Market Committee meeting LINK

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Stock Market surges with the announcement of a 90-day pause on tariffs.

@ Newshounds News™
Source - Google

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Crypto market surges on Trump tariff pause

XRP jumped from $1.87 at 1:15 pm to $2.08 at 1:35 pm ET with the announcement of the 90 day pause on tariffs.

@ Newshounds News™
Source:  Coinbase

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