T&Q Morning Briefing

Good morning. Markets remain on edge this Wednesday after yesterday’s dramatic reversal saw the S&P 500 and Nasdaq give up strong early gains and end deep in the red. Optimism from potential trade negotiations with countries like Japan, Vietnam, Israel, and South Korea quickly faded after the White House confirmed an additional 104% tariff on Chinese goods would take effect at midnight.

Investor confidence was further shaken as China vowed to “fight to the end,” ratcheting up tensions ahead of what many fear could be a prolonged trade war. All major U.S. equity sectors ended the day lower, while Treasury yields pushed higher after a weak bond auction. The economic backdrop is growing more uncertain, and market volatility remains elevated.

Looking ahead, all eyes will be on Thursday’s CPI report. While the upcoming data may not yet reflect the full impact of new tariffs, it could shape expectations for how the Federal Reserve responds to this evolving policy shock.

The World Flatters the Tariff King
Global leaders are using praise as a diplomatic strategy, attempting to soften President Trump’s trade stance by appealing to his ego. While some countries face punishing tariffs, others are seeking exemptions through charm and strategic alignment.
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America’s Tariffs Are the Worst Policy Shock in Trade History
Economists warn that the Trump administration’s broad and abrupt tariffs represent an unprecedented disruption to global trade flows. Comparisons to the 1930s Smoot-Hawley Act are surfacing, with the potential for long-term economic harm.
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Stock Volatility Deepens
The WSJ delivers rolling updates as markets react to tariff escalations and Federal Reserve uncertainty. Volatility remains extreme with investors looking for clarity amid rapid policy changes.
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Trump’s Inner Circle of Big Bank Allies Gains Clout
Executives from the nation’s largest banks are playing an increasingly visible role in advising the White House. Their involvement could steer financial policy as market conditions deteriorate.
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What the Fed Could Do as the Stock Rout Spreads
MarketWatch outlines potential responses from the Fed as risk assets tumble and credit markets tighten. The central bank faces a delicate balancing act between inflation and growth concerns.
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Why the Treasury Market is Getting Hammered
U.S. government bonds are typically safe havens, but not this time. Trump’s tariff regime is altering global capital flows and straining even the deepest markets.
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China Vows ‘Forceful Countermeasures’
Beijing has pledged to escalate its response to new U.S. tariffs, raising the stakes further. Options include limits on U.S. firms, rare earth restrictions, or tighter capital controls.
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Ray Dalio Warns of “Once-in-a-Lifetime” Breakdown
The billionaire investor cautions that the current economic environment reflects systemic fragility. He advises a reassessment of traditional strategies as geopolitical and monetary risks converge.
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Equities began Tuesday with a powerful rally, driven by optimism over renewed trade talks with several U.S. allies. However, sentiment soured quickly as the White House confirmed that a 104% tariff on Chinese goods would begin at midnight due to China’s failure to withdraw its 34% retaliatory tariffs. Markets reversed sharply, with the S&P 500 falling more than 300 points from its peak and the Nasdaq plunging 1,200 points from its intraday high.

All eleven S&P sectors turned negative, with the heaviest losses in materials, energy, and retail stocks. Treasury yields surged late in the day following a weak 3-year auction, with the 10-year note hitting 4.26% and the 30-year reaching 4.72%. Bond market volatility has intensified as investor demand softens amid mounting macroeconomic uncertainty.

In commodities, gold settled at $2,990.20 per ounce, off earlier highs but still supported by safe-haven demand. Oil prices extended their decline, with WTI crude falling 1.85% to $59.58 on fears that the tariff fight may reduce Chinese demand. Brent crude also dropped, settling at $62.82.

Markets remain trapped in a cycle of headline whiplash. Any hint of negotiation optimism is being swamped by escalation headlines and reactive policymaking. Stay nimble out there.