Market Report for Wednesday, April 9, 2025
Wall Street jettisoned gravity today as President Trump called a 90-day armistice in his on-again, off-again trade war. A record 30 billion shares took flight in the best showing since 2008 and the Nasdaq’s second-best performance on record.
Level Change 4/9/25 (%)
– – – – – – – – – – – – – – –
+7.9 Dow
+12.2 Nasdaq
+12.1 Nasdaq 100
+9.5 S&P 500
+9.3 S&P 400
+8.8 S&P 600
The day began in a blue funk, courtesy of Beijing’s decision to lift tariffs on US goods to 84% from 34%. Talking heads groaned that a structural rebalance of global trade is underway, and not the sort likely to earn applause on either side of the Pacific. Reports surfaced of companies raising prices to stay afloat amid the tariff squall. Analysts dutifully trimmed their S&P 500 targets. With Q1 earnings looming, Wall Street’s latest parlor game is guessing whether companies will even bother offering guidance. On a floor this slick, would you?
But the big overhang was the bond market, where analysts whispered about a “disorderly forced liquidation”—someone’s spreadsheet went up in smoke. Yields spiked as the so-called basis trade fell apart like a rental tux at closing time.
This arbitrage strategy involves shorting Treasury futures while buying the actual bonds (or the reverse), aiming to pocket the sliver of difference—the basis—when prices converge. But when the spread moves the wrong way, traders don’t stroll to the exits; they stampede. Bonds get dumped, futures get bought back, and the whole trade flips from tidy to terrifying in a Trumpian minute. That’s what looked to be unfolding in the three days leading up to this morning.
On Monday and Tuesday, the 30-year Treasury notched its biggest yield surge since the pandemic began, a move that sent the iShares 20+ Year Treasury Bond ETF (TLT +0.6%) tumbling 4.9% over the two days, a full-on faceplant by long-bond standards. Over on LinkedIn, Jim Bianco of Bianco Research dubbed it a “tell your grandchildren I was there” kind of day in the bond market.
Rumor has it that it wasn’t stocks, but imploding bonds, that forced Trump to tap the brakes on tariffs. Treasury Secretary Scott Bessent denies this, of course. Reporters noted yields rising faster than a bad smell in a small elevator. They asked whether fears about a liquidity crisis and Treasuries losing their safe-haven status spurred Trump’s tactical timeout.
Officially, no. Unofficially, let’s just say the timing was exquisite.
“This was driven by the president’s strategy,” Bessent swore. “He and I had a long talk on Sunday, and this was his strategy all along.” On Fox Business, he offered further reassurance that these “deleveraging convulsions” happen now and then, no biggie.
Well, it was a biggie to potential home buyers, whose stock portfolios tanked as interest rates rose, a most unwelcome housewarming gift from the bond market.
But never mind the home buyers, the big takeaway is that the Trump Put exists after all, just lower than long imagined. Stocks can fend for themselves, but when the bond market raises its voice, Team Trump drops the act—as Bessent … denies. The plan all along? Sure thing, Scott. Plan?
Tonight, crack or pop something in celebration, just don’t get carried away. Universal 10% tariffs are still tugging at profits, inflation is all the Fed can talk about, US-China tension shows no signs of retreat (Trump just hiked China tariffs to 125%), and the chaos crew still holds the remote.
Volatility hasn’t left the building. It may have just stepped out for air.
— Jason Kelly
