April Review
Risk markets faced significant volatility this month following President Trump’s “Liberation Day” on April 2nd when he announced unexpected worldwide reciprocal tariffs. The S&P 500 fell over 12% in the week following the announcement and experienced a one-day surge of 9.5% on April 9th when President Trump again surprised the market with a 90-day pause on new tariffs for all countries, excluding China and opting for a flat 10% rate instead.
Market optimism was cut short by a tit-for-tat escalation of retaliatory tariff threats between China and the US, leading to a 125% tariff on US imports to China and a 145% tariff on Chinese imports to the US. However, smartphones, computers, chip-making equipment and other electronics have been spared from the US tariffs on China, lending comfort to the panic-stricken US tech sector.
The S&P ended the month down 0.8%. Several countries have begun trade negotiations with the White House before the pause ends. President Trump’s haphazard handling of trade led to questions to US exceptionalism and a sell-off of traditional US safe havens.
The benchmark ten-year Treasury yield fell 8bps to end the month at 4.17%, after spiking as high as 4.5% during the fallout of Liberation Day. The value of the US dollar also deteriorated relative to other global currencies. The trade tensions dampened expectations of global economic growth, rattling commodity markets, with Brent crude oil ending the month at $63.12/bbl, down 16% from its pre-Liberation-Day price.
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