While many love rollercoasters, the consensus in the office is that we have aged out, proving that you really can’t please all of the people all of the time. And so it was with “Liberation Day”. For market folk, the glass was clearly half-empty and investors seemed conflicted about their “liberation”: from close April 2nd to close April 8th, the S&P500 fell around 12%. Scott Bessent seemed nonplussed, repeating some stats about the distribution of stock ownership among Americans (hint: 50% of people don’t have any).
It turns out the Tree of Liberty doesn’t only need periodic infusions of the blood of patriots and tyrants: it also swallows 401k gains. However, while equities had obvious reservations regarding Trump’s tariff policy, bonds seemed pretty relaxed about it all. Admittedly, the curve mostly bull-steepened, which does suggests some concerns about recession. But overall, things had seemed pretty happy in bond land, right up until Tuesday, when the 3-year year auction didn’t go as well as hoped. It turns out tariffs might have collateral effects on global capital flows.