On 9 April 2025, President Trump announced a 90-day pause on reciprocal tariffs, excluding China, amid market volatility. The White House indicated a 10% baseline tariff for Canada and Mexico but showed uncertainty about current rates for those nations.
Market reactions included a notable rise in the S&P 500 and Nasdaq, up 9% and 11.5% respectively. Gold saw its largest one-day gain in five years, jumping $114 to $3098, while WTI crude oil increased by $3.22 to $62.80.
Economic Outlook and Market Response
US Treasury auctions yielded a high rate of 4.435% for 10-year notes. Although bond market fears persisted, Trump’s remarks alongside supportive comments from financial executives led to a considerable market turnaround. The overall economic outlook remains uncertain, particularly regarding further negotiations impacting 70 countries within the tariff framework.
The White House move on 9 April was a distinct shift in tone, albeit with only partial clarity. By implementing a 90-day halting period on reciprocal tariffs—while notably excluding China—the administration communicated a temporary step back from a more expansive policy seen in earlier months. The suggestion of maintaining a 10% baseline for Canada and Mexico, while leaving actual figures ambiguous, added a layer of unpredictability that market participants had to rapidly price in.
What followed was a strong and largely positive reaction in equities. We saw the S&P 500 jump by 9% and the Nasdaq outperform with an 11.5% gain. These kinds of broad rises imply positioning that had been defensive or underweighted prior to the announcement was abruptly reversed. In short, those on the sidelines—or short—were caught leaning the wrong way.
There was also an explosive move in gold, climbing $114 in a single session. This was the largest single-day gain in five years, showing clearly that hedging activity intensified, likely outpacing pure safe-haven flows. When traders move so decisively into hard assets, it tends to reflect concern not just about policy direction, but also broader macro uncertainty. At the same time, WTI crude pushing higher by over $3 suggests markets are paying attention to growth expectations and not just policy headlines.
Market Strategies and Forward Looking Perspectives
Meanwhile, the 10-year Treasury auction result—4.435%—was high, but the real takeaway wasn’t so much the yield itself, but how buyers responded soon after. Despite the fairly strong uptick in rates, bond auctions did not break down, and buying interest returned. That is telling. Especially when considering that fears of rate pressure were already embedded. The President’s comments, supported by the messaging from senior financial executives, offered enough reassurance for bond traders to cover shorts or re-enter on dips.
Now, what all of this means in practical terms is that volatility risk remains embedded for at least the next cycle or two. We’re likely to see sharp sentiment reversals tied more closely to political statements or trade conjecture than to core macro data. For now, the pricing in options markets continues to support a bias toward tail-risk hedging, albeit with a skew toward upside participation, especially in tech-related sectors.
We are adjusting our exposure in derivatives accordingly, with a preference for positioning that benefits from wide price swings rather than direction alone. Specifically, strategies like straddles or calendar spreads—especially in indexes—offer a way to express participation without pinning to a singular market bias. Implied volatility levels have jumped, but remain under historical highs, which makes premium collection less compelling unless paired with careful hedging.
Traders should pay particularly close attention to how forward rates shift after any additional statements from trade offices or treasury officials. Much of the reaction appears tied less to fundamental change and more to shifting probabilities. Policy uncertainty won’t resolve in a straight line, and neither will market pricing.
Next week’s Federal Reserve minutes, though not directly linked to tariffs, could have a second-order effect, especially if language around global risk is toned down or firmed up. This might move duration-linked products, including long-dated swaps, in unexpected ways.
Maintain flexibility, but resist overtrading choppy conditions. Focus instead on risk-defined setups that allow us to adapt without needing constant exposure readjustments. The next critical data point may not be economic at all—but political. And political signals now price faster and heavier than before.
