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Trump’s New Tariff Announcements Slam Global Financial Markets
There was a school of thought that expected that perhaps on April 2nd, Markets would not fall off that much, due to President Trump making more of his Tariff imposition announcements. This was because it was felt that this was already priced in because President Trump’s always been making some Tariff imposition announcements every now on then since February.
Yet, on the much awaited American Trade Liberation Day, President Trump imposed one of the most aggressive Tariff rates to 180 countries ranging from 10% to 55%, which the Markets had not factored in, which is why Global Financial Markets bleed on April 2nd.
Trump's Super-Aggressive Tariff Rates Shake the World Again
The US under President Trump did make a good start with a Tariff heavy Trade Policy with a default 10% base Tariff rate applicable to all goods and products that’s imported to the US! This would come into effect on April 5th.
However, the full offensiveness of these Tariffs come to play on April 9, as the new Tariff rates that's announced by President Trump come into play! These high Tariff rates would replace the base 10% Tariff rate.
Some of the notable offensive Tariff rates got imposed on China with 54%, Vietnam 46%, while economically weaker countries like Bangladesh, Sri Lanka also get their tariff slaps with 37% and 44% rates respectively!
European Union relatively gets a mild dose of Tariff slap with a 20% imposition!)
Investor Sentiment Turns Deeply Negative Amid Global Recession Fears
These Tariff rate announcements only escalated investors’ fear of possible economic chaos, as downside risks to Global Trade increased, with a stronger possibility of decline in Global Trade, inflation, recession, stagflation.
Earlier in February, US was shown that other countries were ready to impose retaliatory tariffs on US with China and Canada representatives making statements to such effect.
So, in the coming days, it’s expected that many countries would fight back and impose retaliatory tariffs on US. It’s well known that this would drive up costs of products worldwide!
Tariff Rift has caused global investors to drop USD as their safe-haven asset
What’s interesting is that due to USA being on the offensive with all countries of the World with its offensive Tariff attacks, investors are adopting rival currencies as altenative safe haven currencies to the USD.
The Greenback has always been the go-to traditional safe haven asset globally.
This is reflected in the decline of the DXY index, which shows the strength of the Dollar has declined to that of its 6 rival currencies.
DXY, has declined 8% since Jan from 109 to 101 range.
Euro, Pound, and Yen Now Acting as Safe-Haven Currencies
Euro: Up 9% vs USD since Feb (from 1.01 to 1.11 USD)
GBP: Up 9% vs USD since Jan (from 1.19 to 1.32 USD)
JPY: Up 9% vs USD since Jan (from 0.006302 to 0.006973 USD)
These currencies have taken over the safe-haven spotlight, once dominated by the U.S. dollar.
These currencies have taken over the safe-haven spotlight, once dominated by the U.S. dollar.
Gold tops further rising beyond the $3,000 range!
Liberation Day had Gold break barriers as the precious yellow metal’s price broke the resistance range of $3000 and rose to a new All time High price range of $3200!
One can imagine the increased level of negative investor sentiment, as investor confidence on the market crumbled with risks of recession and inflationary forces coming to play to dampen the Global economy now looking very likely to occur!
Investors preserve their wealth by investing in US 10-Year Bonds
US Bonds remained a safe haven asset as investors put their money in US 10 Year Bonds, because of which the price of 10 Year US Bonds increased from 94 since to 106 now. Notice that it pokes over the resistance that’s in the general sell of range of 104!
Market Outlook: Bearish Sentiment and Recession Expectations Dominate
All these developments reflect investors negative outlook on Global Financial Markets - revealing investors's negative sentiment and low confidence on the robustness of the Economy.
Everyone expects Global Economy to soon get into a recesstionary phase. Maybe it's just a matter of time, let's keep watching!
The focus of investor during such periods is on wealth preservation, with investor appetite being low to try make money investing on risk on asset markets!