Markets
- S&P 500 down 2.0%
- WTI crude oil down 84-cents to $69.08
- US 10-year yields down 12 bps to 4.25%
- Gold up $28 to $3084
- JPY leads, NZD lags
What’s worrisome about today’s price action was that there was a fair bit of good news. Yes, UMich was poor and the spending in PCE stumbled but there were positive future indications. 1) Trump cooled things down with Canada 2) The EU floated some trade concessions 3) PCE inflation was only fractionally higher than expected.
Despite that, there was rout in equities that spilled over into a 125 pip decline in USD/JPY and a bruising day in equity markets.
The easy target is angst about April 2. At this point, the weak hands are getting shaken out and the buyers are waiting for the smoke to clear. Yes, maybe there were some nice comments about Canada and negotiating tariff deals more broadly, but it’s Trump and he’s unpredictable. I get that and that’s understandable, even if the drastic worsening of sentiment in the past 9 hours isn’t.
What I worry about in the bigger picture — especially in light of some positive headlines — is that the Trump administration is losing the benefit of the doubt. I still think there is a ‘Trump put’ but they’re playing such a dangerous game with trade and the economy that it could blow up in their face. Plenty of things can go wrong here and that could lead to a much harder landing.
Also notable is that the US dollar struggled today, despite a brutal selloff in stocks. That highlights are market that’s pulling money out of the USA on an uncertain outlook. Today the CoreWeave IPO would have busted if some big partners hadn’t stepped in and Lululemon had a poor guide that saw the stock fall 14%.
Overall, it was a headline-heavy day and next week is chalk-full of risk events so it won’t get any easier. Have a great weekend.
