When markets voted for the exit by selling stock holdings after “Liberation Day,” the rebound that followed caught investors off guard. The White House paused its latest set of tariffs by 90 days.
U.S. Treasury Secretary elaborated on the 90-day pause. In an interview with Yahoo Finance, he said the government will have a completed legal document about tariffs. This will include 14-15 of America’s largest trading partners. However, it excludes China.
Stock markets are willing to bet that trade deals will matter more than the loss in business deals with China. Still, Bessent conceded that the over 145% tariff on China may not happen.
Stock markets are highly volatile amid the growing uncertainty. Consumer confidence is plunging in North America. This hurts spending. It could lead to a recession in the current quarter. Investors cut their position in economically sensitive sectors like airlines, automotive, and luxury goods. Expect stocks like United Airlines (UAL), General Motors (GM), Ford Motor (F), and elf Beauty (ELF) to underperform.
Overall, risks are high that the stock indices will trade lower this year. S&P 500 (SPY) peaked at over 6,100 and is on a downtrend. The bond market is not attractive, either. 20+ Year (TLT) and 7-10 Year treasuries (IEF) sold off alongside stock markets. However, they are starting to find support at current levels. Look out for interest rates holding steady at 4.25% - 4.75%.
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