The bond market is like politics. It may seem boring and unnecessarily opaque (and that’s true for both), but whether you care about it or not, it still touches every part of your life. I focus on the largest, most liquid market in the world a lot for good reason, and today proved why. In just a week of pure bond market turmoil, it did what two months of stock market semi-panic could not. The Illuminati are real. They own US Treasuries, and they made Trump blink today.
The entire stock market violently moved up off this post, which is definitely a good and efficient way to run history’s largest economy. The long bond selloff I wrote about this morning completely reversed, and now short-term bonds are selling like hot cakes. This is bad. Volatility for the bond market is bad. We are so stock market focused on up or down that we cannot learn the language that the price of money speaks, which is dependability and predictability. Trump is hailing the massive market pump off this news as proof of his supposed negotiating genius, but I have yet to see any reports of Trump getting anything out of this move, and he even admitted himself that this pause came because people were getting afraid.
Trump blinked.
Only kind of, though, and definitely not the way the market so desperately wants him to. He’s still imposing universal tariffs of ten percent, and he escalated his trade war with China today. It was basically his version of a compromise.
There is a vast difference between destroying paper wealth in the stock market, and the bond market chaos that has proven it can take out hedge funds’ leveraged positions the size of small countries’ GDP and cascade into a cataclysmic economic crisis. I have no doubt that in the many “corporate titans reach out to Trump” reports in the past week, that the Goldman Sachs’ of the world made it crystal clear that Trump was dancing towards their margin calls, and if he wanted to experience what 2008 was like and make Lehman Brothers Great Again, he should keep doing what he was doing (I suspect that Trump hinted this was what J.P. Morgan’s Jamie Dimon told him). The market pumping off fake news yesterday was undoubtedly a factor in Trump’s decision too, the same way that rewarding a dog with a treat when you call it is.
Another aspect of this fear in the markets making Trump kind of blink is China currently holding an economic knife to Trump’s throat. If you want to see where the real trade war action is, it’s not in the stock market, it’s on the dollar/yuan chart, which is currently sitting right at post-2005 all-time highs. That is the opposite of where Trump wants to take it in his bid to drag the US economy back to the 19th century and devalue the dollar so people can buy more of our $10,000 iPhones. Since liberation day, China has very clearly been devaluing the yuan to a degree that tells Trump that if he wants to start an economic shooting war, they have plenty of ammo and know how to use it, but it’s also not too late to walk back from the brink.
Trump ran towards the brink today.
All of this is not good. The core engine of the global economy is at economic war. The Nasdaq rising over 12 percent entirely off a Truth Social post is not bullish in the long term. The stock market has become so astonishingly shortsighted and dependent on options trading that Trump’s 90-day delay is an eternity in their eyes, but in 90 days Trump has still promised us that we will be in the same position we were in last week, but now with 125 percent tariffs on China and 10 percent on Canada and Mexico. He basically injected the markets with a sugar high, and so far, the bond market quite literally is not buying it. Despite switching from being concentrated in the long end of the yield curve to the short end, it all still sold off today through the up only euphoria in stocks. The ten-year Treasury Note yield that was scaring the living daylights out of the market and helped force Trump’s hand still sold off today as its yield was up 1.21 percent. This all looks like bond market deleveraging in action, just in different directions based on how Trump is distorting the world.
The stock market is genuinely deranged. It has become so addicted to short-term speculation and options positioning that it has created an entire ecosystem around missing the forest for the trees. If you weight all imports by the total tariffs imposed by Trump, they went up today, not down. China is the whole ballgame in trade, everything else is just details.
If you weight 2024 imports by the 10%/”reciprocal” tariff amount announced last Wednesday (with China at 54%, Mexico/Canada at 0%), the total tariff rate would have been 21%. Today, with China at 125% and Mexico/Canada at 10% along with ~everybody else, the rate is 26%.
— George Pearkes (@peark.es) April 9, 2025 at 12:40 PM
So why did the Nasdaq pump like mad?! Upon Trump’s announcement, it didn’t while the S&P 500 teleported up 6 percent, which makes sense because the Nasdaq’s China-dependent companies got bad news while the rest of the world got short-term relief. Why in the world would anyone buy stock in a company the day it was announced the tariffs they will pass down to their consumers were going up to a level specifically designed to nuke the global economy? What the fuck is going on???
Because the stock market isn’t really about the distant future anymore, but the next day, week, month or quarter. Goldman Sachs called for a recession this morning then rescinded it almost immediately, just a couple days after Blackrock CEO Larry Fink said every executive was telling him we were already in a recession, proving how flimsy the commitment from a group of folks who staked out a “100 percent” chance of a recession in 2023 can be (spoiler: that didn’t happen). We are in clown world where Goldman is tacitly admitting now that their view on the economy is entirely going to be dictated by Trump’s Truth Social posts. Look at how the mighty vampire squid has fallen. How pathetic.
Thankfully, the Illuminati within Goldman Sachs and across the rest of the finance world see and have been seeing through all this bullshit, and my knee-jerk thinking about this historically insane day of market movement is that it is leading nowhere good and maybe even less good than the trajectory it was on before (although Trump has bought the bond market more time to unwind their leveraged positions that he’s trying to take out). If bonds continue to sell off as Trump injects the stock market with a sugar high, what happens in 90 days? Will Trump cave again? Will the market continue to take him at his word if he backs down again?
What if he doesn’t back down and says the reality that made Goldman Sachs believe in a recession is still happening? What happens if China decides to remind Trump how much they like to devalue their currency? What happens if Trump orders the Fed to cut interest rates and finally makes good on his crusade to destroy its image of independence? What happens if they do it and inflation comes back and bond yields surge and it’s the 1970s all over again? The existential risks to the economy right now seem endless, and all within Trump’s reach.
If the bond market continues to signal that it sees things as turbo fucked throughout the stock market thinking up only Joe is back, that is the kind of separation between perception and reality that could lead to a Black Monday-style crash with the right kind of spark. A 20-plus percent stock market fall in a day sounds crazy, sure, but imagine I told you in September that the Nasdaq would pump over 12 percent off news of 125 percent tariffs on China. That happened today. We are so far through the looking glass in America’s decline now that anything is possible under this chaotic authoritarian who still does not understand the difference between a tariff and a trade deficit.
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