2025-04-03 02:15:00 ET

Summary

• Impact effect? Risk-off, and lower Treasury yields. No break of prior ranges on market rates, but it smells like they want to go lower ahead.
• On forex, the new global trading regime still argues for a stronger dollar, but it won't be easy to convince markets protectionism is here to stay.
• Overall, it feels like this could unravel further in a negative fashion.

By Padhraic Garvey, CFA and Francesco Pesole

Treasuries continue to view tariffs as a bigger immediate risk for activity

Donald Trump spoke of 10% tariff across the board before he was elected president. He’s kept true to that, imposing a blanket tariff. But he’s overlayed that with additional tariffs on a wide group of countries that the US views as already implicitly placing tariffs on US exports. See more detail here . Basically, the 10% tariff gets amplified to something closer to 20-25%, on average. To the extent that this places upward pressure on US domestic prices, there is clear negative tint for bonds. But the dominant reaction is one of apprehension on what this all means for activity, and hence, another push lower in market yields has been the main outcome....

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