T&Q Morning Briefing

Good morning. Equity markets continue to grapple with the fallout from intensifying trade tensions after China announced sweeping retaliatory tariffs over the weekend. The S&P 500 has now posted its worst two-day performance since the onset of the COVID-19 pandemic, and major indices are officially in correction or bear market territory.

The escalation comes as China unveiled a 34% tariff on all U.S. imports, beginning April 10, in response to the White House’s recent tariff hikes. Oil fell to a four-year low, gold tumbled from record highs, and bond yields continued their retreat. Meanwhile, U.S. economic data remains firm: Friday’s jobs report beat expectations, though markets were largely unfazed.

The Fed is now under intense scrutiny. While Chair Powell offered no clear signal of imminent rate cuts in his Friday remarks, markets are pricing in up to five cuts for 2025. Futures are pointing to another weak open this morning as investors brace for continued volatility and await signs of potential negotiation.

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Wall Street Pushes Back
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With major duties taking effect this week, markets are watching closely to see if any last-minute negotiations can defuse tensions. Read full article →

Oil Below $60 Amid Recession Fears
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U.S. equities closed sharply lower on Friday following China’s announcement of retaliatory 34% tariffs on all U.S. goods, escalating the global trade war. The Nasdaq and small-cap Russell 2000 both officially entered bear market territory, down more than 20% from their recent highs. The S&P 500 fell 4.8%, marking its worst day since 2020, and ended the week down over 9%.

Asian markets followed suit, with Japan’s Nikkei dropping 2.75% and European equities also sliding sharply. Energy, technology, and financial sectors led the declines globally. The U.S. dollar advanced modestly, though it remains down approximately 5% year-to-date.

The March nonfarm payrolls report showed job growth of 228,000—well above expectations. The unemployment rate ticked up to 4.2%, while average hourly earnings rose 3.8% year-over-year. Revisions to prior months slightly dampened the headline strength, but overall, the labor market remained solid heading into the latest trade headwinds.

In commodities, WTI crude fell 7.4% to $61.99, its lowest since 2021, after OPEC+ surprised markets by announcing accelerated output increases. Gold declined 2.76% to $3,035.40/oz, pulling back from record highs. The 10-year Treasury yield dipped as low as 3.86% before settling near 4.00% as bond markets responded to safe-haven flows and shifting Fed expectations.

Chair Powell’s Friday remarks acknowledged rising uncertainty but did not signal an imminent shift in policy, tempering market hopes for faster rate cuts. However, futures are now pricing in five cuts this year. Fed policymakers appear to be weighing inflation risk against deteriorating growth—a delicate balance in the face of heightened geopolitical and trade tensions.

The weekend’s tariff response from China has shaken investor confidence further and pushed major indices deeper into correction. All eyes now turn to how the administration navigates the week ahead—and whether the Fed begins to shift its stance. Until then, expect volatility to remain the rule, not the exception.