How Trump Wall Street turned into a madhouse

On Monday 7 April around a quarter past four in the afternoon, Dutch time, large red capital letters lifted up the Reuternieuwsfeed Those stock market traders constantly provide information. President Trump would consider welding a 90 -day break for the enormous global import duties that he had announced the week before, on April 2. They were bigger, more intense and more acute than the biggest pessimist had thought.

Since that announcement, the international scholarships were in turmoil: the stock prices have already fell by 4 to 5 percent on Thursday and Friday. And those 7th April promised little else.

A vague account on X, ‘Walter Bloomberg’, with that news from that break. Wall Street was then open for 45 minutes, and in a few minutes the prices shot up by about 5 percent. Then the White House said he knew nothing, and the rates collapsed just as hard.

Now you can see this as an incident, of which there have been more: technical oddities in the stock market system for example. But this Monday was different. A message from a vague source that would normally have been completely ignored was taken completely seriously – even if it was only a few minutes. Because the times are not normal, not even on Wall Street. The strangest things are possible under the Trump government, so why not?

Here you can see the price reaction from minute to minute. Just like the even more intense price response on Wednesday 9 April, when the same news – a 90 -day break at the taxes – was true. In addition to China, all new taxes for three months will enter the fridge. Shares rose by almost 10 percent. And that is one of the largest price increases during a trading day since the Second World War.

But is this now the peace back on the financial markets? Certainly not. First of all, those taxes are still in the air. Only the uncertainty now takes even longer. Bad for investors, bad especially for entrepreneurs who still don’t know where they stand.

There is another reason to be worried. Normally, investors in the event of substantial price falls on the stock market to safe ports. Especially government loans from ‘sturdy’ countries serve that goal. Your money is in the right place, and you can wait afterwards until the coast is safe again.

This time it went differently. Investors did fled on Thursday and Friday in government loans, certainly also American. They exhausted the rates of those loans and therefore, as it goes, the effective interest on those loans fell. But Monday and the following days the mood changed.

Investors ran not only from shares, but also from US government loans. While the stock prices fell, the interest rate now also. On Wednesday there was a peak of 4.5 percent in interest on US government loans with a term of ten years. You can see that here:

Shortly after the interest peak, Trump came up with his 90 -day break, the stock prices shot up and calmed the bond market, where the government loans are traded, a bit again. But not entirely. Because the actual reason for the earlier unusual market reaction, when investors withdrew from shares and bonds at the same time, has not really been clarified.

There are theories: Trumps trade policy with levies raises American inflation because they increase the prices of import goods. The bond market responds with falling prices and rising interest rates, to compensate investors for higher inflation. If the economy collapses because of those taxes and inflation rises, it may happen that stock prices fall and the interest on government loans increases.

Other theory, which can be true at the same time: in the financial markets there are all kinds of transactions based on government loans, for example through speculative investment funds, which have been totally inconvenienced by the intense policy and the price movements of recent times. And those transactions are now quickly reversed, so that the underlying government loans are on sale.

Another theory: China and other countries that own US government loans as a dollar reserve have been selling them for a while, and you notice that at the rates. And last theory: investors simply no longer trust US public finances, and ask more interest on government loans to compensate for the risk of default. The story fits in with this that Trump as a real estate entrepreneur was also not afraid of a remediation of his own debts.

So you see: the statements are ripe and green. But, as evidenced by the tweet from Walter Bloomberg, the times are so bizarre that investors are willing to observe much more for true than before.

Should the reason for Trump’s decision on the tax break be sought in the bond market? Not unlikely. Because if it had gotten out of hand there, the turnips are done.

In the meantime, Trumps Tech broos can breathe again. The hefty falls in their companies also disappeared like snow in the sun on Wednesday.

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