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Russian (RU) Rita Nazareth, Isabelle Lee and Emily Graffeo
Fri, Apr 11, 2025, 9:54 AM 5 min read
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(Bloomberg) -- Stocks rose amid wild gyrations as the intensifying US-China trade spat threatens turmoil across the global economy and the financial system. Bonds sank alongside the dollar, with fear continuing to grow that foreign investors are beating a retreat from American assets.
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Volatility shows little signs of abating, with concerns that President Donald Trump’s fast-evolving trade policy not only is shaking the globe but threatening the US status as the world’s safe haven. Equity convulsions have unsettled traders, with the S&P 500 up 1% after earlier falling about as much. Longer-dated US yields headed toward their biggest weekly surge since the 1980s, with concerns over economic growth driving the greenback to a fresh six-month low.
Not since the Covid-19 pandemic has there been this little clarity on what the outlook for economies and earnings will look like, with financial markets descending into chaos, China unleashing retaliatory measures and the US president pausing some levies only hours after they took effect.
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Investors should sell any rallies in the S&P 500 until the US and China de-escalate the global trade war and the Federal Reserve steps in, according to Bank of America’s Michael Hartnett.
The strategist said tariffs and the resulting market turmoil were turning US exceptionalism into “US repudiation.” He recommends a short position on stocks — until the S&P 500 hits 4,800 points — and a long bet on two-year Treasuries. The guage traded around 5,340 Friday.
Higher bond yields, lower stocks and a weaker dollar are “driving global asset liquidation, will likely force policymakers to act,” Hartnett wrote in a note. But investors should “sell the rips in risk assets.”
“The US markets are not trading in the last couple weeks, like their traditional developed safe-haven status,” said Phillip Colmar at MRB Partners. “They’re trading more like a weak emerging-market country. We’re seeing the dollar really slide, and we’re seeing the bond market get threatened here.”
Friday brought a fresh signal that consumers were queasy even before Wednesday’s policy shift, with a plunge in sentiment as inflation expectations soared to multi-decades highs.
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