Good morning. After Wednesday’s historic rally, markets took a breather Thursday as investors digested inflation data and a potential escalation in the U.S.-China tariff standoff. President Trump’s 90-day tariff pause lifted sentiment earlier this week, but tensions remain high with China poised to implement a 125% tariff on U.S. goods beginning tomorrow.

U.S. CPI data came in cooler than expected, with both headline and core inflation continuing to ease. Still, with Chinese retaliation pending and earnings season about to begin, markets remain on edge. Bond yields remain elevated, and the dollar declined sharply as risk sentiment continues to swing with each new trade headline.

As we head into the weekend, we’ll be watching for any additional responses from China or the U.S., particularly related to ongoing negotiations and sector-specific tariffs

U.S. and China Dig In for a Long Fight
The Wall Street Journal reports that both sides are preparing for a protracted economic standoff. With China’s new 125% tariffs set to begin on April 12 and no talks scheduled, there’s growing concern the two powers may not return to the negotiating table any time soon.
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Trump Pursues Deals With Smaller Partners
President Trump is doubling down on bilateral trade negotiations with smaller allies like Vietnam, Israel, and South Korea. The WSJ outlines how the administration sees these deals as leverage against larger players like China and the EU.
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Larry Fink Warns of a '2008-like' Environment
The BlackRock CEO says investor anxiety is as palpable as during the global financial crisis. He attributes the volatility more to confusion and uncertainty than deteriorating fundamentals.
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Mortgage Applications Soar
Falling interest rates have sparked a surge in mortgage activity. The latest data shows a 20% jump in applications, with refinance activity leading the way as borrowers move quickly to lock in lower rates.
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China Strikes Back With 125% Tariff
CNBC reports that China will enact a 125% tariff on all U.S. goods beginning April 12. The move is expected to impact agriculture, tech, and consumer goods most heavily.
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Bond Market Sends a Warning
After days of chaos, yields have started to stabilize, but Bloomberg notes that Treasuries are behaving less like risk-free assets and more like equities. The bond market is now a key battlefield in the administration’s economic policy fight.
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Trump Dodged Disaster – For Now
Despite the reprieve, CNBC highlights that serious damage has already been done. The bond market’s reaction, along with elevated volatility, suggests deeper issues that could linger.
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Stocks retreated Thursday, giving back some of the prior day’s historic gains. Energy and technology stocks led the pullback, while defensive sectors held up better. The S&P 500 and Nasdaq both flirted with a 7% decline midday before paring losses, and all three major indices still closed in the red.

The retreat came despite encouraging economic data. U.S. consumer price index (CPI) inflation fell more than expected in March, with headline inflation at 2.4% and core CPI at 2.8%, providing evidence that pricing pressures continue to moderate. Weekly jobless claims ticked up slightly but remain consistent with a healthy labor market.

China’s silence on further retaliation left investors wary, particularly as the U.S. confirmed it would raise China’s tariff rate to 145%, while maintaining sectoral tariffs on autos and metals. Global equities were mixed, with Asia sharply higher and Europe modestly positive on the 90-day tariff reprieve. In bond markets, yields remained elevated but stable after a strong 30-year auction. Gold surged over 3% on haven flows, while crude oil dropped sharply amid renewed demand concerns and downward revisions to global oil demand forecasts.

The search for equilibrium after one of the most volatile stretches in recent memory. The 90-day tariff pause has provided a needed breather, but the implementation of China’s 125% tariff tomorrow ensures trade tensions will remain top-of-mind. Add in a crucial earnings season and looming inflation data, and investors will have no shortage of catalysts in the days ahead.