April 10, 2025 Headlines

Yesterday’s market move epitomized extreme whipsaw as the S&P 500 rallied 9.52%, the biggest one-day move since October 13, 2008.

However, let’s hope the comparisons to 2008 end there because the S&P fell another 25% over the next six weeks. President Trump announced via social media that he was pausing the “reciprocal” tariffs for 90 days for everyone but China, whose tariffs were ratcheted up to 125% yesterday. There will still be the baseline 10% tariffs against all other countries while negotiations occur. Trump attributed the decision to bond market conditions “where people were getting a little queasy.” My sentiment exactly, although we still weren’t seeing a major credit/liquidity event yet, but the sharp rise in bond yields amidst a major risk-off move in other asset classes was enough to make the President take pause on the advice of Treasury Secretary Bessent. For the reaction in Treasuries, the curve flattened sharply as the front-end of repriced for less Fed rate cuts (yields up 13-18 bps), and long-end yields closed modestly lower. We’re not out of the woods yet, but the shift from immediate, non-negotiable tariffs at levels not seen in more than 100 years helped ease the worst-case fears, despite severe levies still applied toward China.

U.S. equity futures are down 1-2% this morning, and front-end Treasury yields are 7-8 bps lower following the release of the March CPI report. Headline CPI fell 0.1% m/m (+0.1% m/m expected), and core CPI rose just 0.1% last month (+0.3% expected), the lowest monthly reading since last June. Used car prices and airfares were sharply lower, and services excluding shelter were modestly lower in March. On a year-over-year basis, core CPI fell 30 bps to 2.8%. In other data, initial jobless claims matched expectations, rising 4,000 last week to 223,000, still a historically low level.

Jason Haley
Chief Investment Officer