On March 13, 2025, President Trump announced potential retaliation against European tariffs on whiskey, which heightened market concerns over tariffs. Despite better-than-expected US PPI data, major stock indices faced declines, with the Dow down 537.12 points and the S&P down 77.81 points.
The S&P index is now 10.18% below its peak, while the NASDAQ is down 14.35%. Initial claims were close to expectations at 220K, and PPI showed 0.0%, lower than the 0.3% estimate.
Forex Market Movements
In the forex market, the US dollar rose against most major currencies, except for the JPY. Key technical levels were outlined for EURUSD, GBPUSD, and USDJPY.
US debt market yields fell, with the 10-year yield at 4.268%. Additionally, crude oil decreased by 1.43%, while gold rose to near $3000 and Bitcoin dropped by $3300.
When ex-President Trump floated the idea of retaliatory tariffs on European whiskey, many investors took it as a clear sign of escalating trade tensions. Markets responded swiftly, with major equities retreating. The S&P and NASDAQ have now tumbled further from their peaks, deepening the downward trajectory that traders have been navigating in recent weeks. When benchmarks are falling at this speed, it indicates not just short-term volatility but a broader shift in sentiment.
Despite the Producer Price Index (PPI) coming in lower than anticipated, which in some instances can be considered supportive for risk assets, investor confidence remained shaky. A reading of 0.0% compared to the projected 0.3% suggests that price pressures may not be building at the pace expected. However, the overriding influence of geopolitical and trade-related headlines outweighed any comfort that a softer PPI reading might have provided. Weekly jobless claims, which were close to consensus at 220K, failed to tip the balance in either direction.
Foreign exchange traders took a clear stance, pushing the US dollar higher against most major peers, with the exception of the yen. Yen appreciation during moments of uncertainty tends to signal a flight to safer positions, reinforcing the notion that risk appetite remains suppressed. Key technical markers for EURUSD, GBPUSD, and USDJPY were identified earlier, and they remain focal points for those monitoring directional momentum.
In fixed income, US Treasury yields slid once again, with the 10-year yield settling at 4.268%. A pullback in yields often implies that investors are seeking security rather than rotating into equities. This is in line with the broader reaction observed across asset classes.
Commodity Market Reactions
Commodities traded with mixed performance. Crude oil saw a more than 1% decline, reflecting adjustments to global demand expectations. Gold, on the other hand, is now closing in on the $3000 mark, underscoring its usual role as a preferred asset during turbulent periods. Meanwhile, Bitcoin extended losses, shedding $3300, reinforcing its typically volatile nature when broader risk aversion takes hold.
With trade tensions dominating headlines, technical levels becoming more meaningful, and risk sentiment remaining fragile, the trading environment demands strict attention to shifting correlations. The coming sessions will test whether certain thresholds hold or if further moves unfold with momentum.
