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US stocks experienced a steep decline, with major indices plummeting sharply. The Nasdaq index fell nearly 6%, marking its fourth largest one-day drop since 2015.
President Trump announced reciprocal tariffs against numerous countries, affecting major US export partners. The tariffs included 34% for China and 25% for South Korea, while Canada, Mexico, and the UK faced a 10% baseline tariff.
Currency market reaction
The USD fell significantly against various currencies, dropping -2.47% against the CHF and -1.66% against the EUR. Despite the decline, the dollar rebounded in the US session, contrasting with the stock market’s downturn.
In the US debt market, yields dropped markedly as concerns of a recession grew. The 2-year yield decreased to 3.687%, while the 10-year yield fell to 4.032%, both at their lowest levels since early October.
Crude oil prices fell by $5.10 or -7.11% due to fears of lower global growth. Gold and silver prices also declined, with gold dropping $23.95 to $3114.28, and silver falling $2.06 to $31.82. Bitcoin saw a modest drop of $196, reaching a low of $81,200.
The past session presented a confluence of sharp declines across equities, commodities, currencies, and bond yields, reflecting heightened uncertainty driven in part by policy pronouncements and market positioning. The equity market sell-off, led by a near 6% slide in the Nasdaq—its fourth most aggressive one-day dip since 2015—was not due to isolated technical factors. It reflected active repositioning following the introduction of new tariffs, which were both targeted and broadly implemented across several key economic partners.
Impact and recalibration signals
With reciprocal tariffs imposed ranging from 10% to 34%, trade costs will now be materially adjusted. These measures, announced by Trump, introduce direct friction into supply chains already strained from prior disruptions. Invariably, this raises production costs downstream while limiting the competitiveness of American goods abroad. There was little delay in the FX market’s response.
The fall in the USD against both the Swiss franc and the euro was rapid during early trading hours. A drop of more than 2% against the more defensive currencies indicated a swing into safety. However, the rebound in the latter half of the session could be interpreted not as confidence in domestic stability, but rather as short-covering or a fade in panic. That rebound came as equity markets continued to sell off, underscoring a disconnect between risk sentiment in stocks and expectations embedded in currency pairs.
Yields on US government bonds traced a different story, one of growing concern. Declines in both the 2-year and 10-year maturities to levels not visited since early autumn suggest mounting expectations of reduced future rate pressure. This is not speculative. These lower yields indicate a probable pricing-in of a slowing economy—perhaps even a policy response in short order, should financial conditions worsen. With the inversion of yield curves softening, the rate market may be transitioning focus—from fearing inflation to anticipating contraction.
The picture was also confirmed, albeit from another angle, in commodities. We saw oil prices revisit levels from late Q2, and the sudden $5.10 drop is less about domestic output and more a signal about anticipated consumption. Energy-sensitive assets tend to respond early to shifts in global demand assumptions. Synchronized declines in industrial metals like silver, and even defensive ones like gold, suggest capital is being parked elsewhere. The fall in both can inform us that hedging strategies are being unwound, or cash conservatism is being chosen over longer-duration store-of-value positions.
Bitcoin’s modest retreat, particularly in the context of such a dramatic session across traditional asset classes, has provided little relief. It’s not so much a store of safety as a waiting room devoid of clearer signals.
As we weigh forthcoming pricing, there’s not much ambiguity. Forward curves, cross-asset rotation, and volatility premiums are all pointing to a market preparing for more sudden shifts, not fewer. Traders relying on momentum will need to measure their exposures more carefully, as recent sharp rebounds, especially in FX, underline how quickly short-lived imbalances can be corrected.
We should remain aware that large directional moves—especially when supported by rate differentials, risk positioning, and forward guidance narratives—have tails. The velocity of reactions across asset classes gives clues not only to sentiment, but also to where liquidity and pain thresholds lie. When derivative markets start treating intraday rebounds as volatility mispricing rather than trend reversal, the temptation to fade rallies increases rapidly.
Staying neutral is not the same as being directionless. These market signals, from yield contraction to sharper commodity exits, suggest that more meaningful repricing across the rate spectrum may follow. It is not uncommon, at this point in the monetary cycle, to see compression in tradable spreads or a re-rating of earnings multiples that resets implied volatility upwards.
Awareness of pushback from macro desks is growing. That pushback is visible in the implied vol term structures, which now reflect not just headline risk, but orderly shifts in sentiment. When we watch the sloping changes in even basic contracts—like calendar spreads or options deltas—we can start positioning ourselves not based on market loyalty, but on current signals of stress and recalibration.
From where we stand, these moves won’t be ignored—they often form the foundation of much broader recalculations. And that’s already taking shape, even if headlines only point to tariffs or Tuesday’s closing prints.
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