It is not a lantern: investors say time to take Trump seriously in commercial tariffs as global markets go back

Singapore, March 4 – Markets no longer think that Donald Trump is full of bravuces and are moving rapidly to anticipate a deceleration in the growth of the United States and global as it raises a wall of tariffs around the world’s economy and commercial partners in the world begin to respond in kind.

Six weeks after his second term, the president of the United States has reached imports from Mexico and Canada with 25 percent levies, put an additional tariff of 20 percent on China’s assets, threatened reciprocal tariffs worldwide and cut military aid to Ukraine.

But instead of growing yields and the highest dollar that investors had moved in November, the so -called “Trump trade” is in full withdrawal.

The commercial conflict has begun seriously and the dollar is falling while the yields of the bonds submerge.

The Americans are shaken. As Goldman Sachs analysts point out, the average tariff rate in China imports is now 34 percent and the increase is approximately double that in the first Trump administration. Nobody wants to bet that there will be fast commitments or offers.

“It is difficult for the markets to continue with an aggressive positioning given the risk that US tariff policies become a penny,” said Chang Wei Liang, DBS currency and credit strategist.

“In credit markets, differentials certainly seem too low given the change in the risk environment and a more adverse and uncertain commercial backdrop.”

Volatility meters for treasure bonds and US and Japanese stocks reached their highest levels of the year this week and involved volatility in augmented currencies.

Defense actions increased, actions in technology companies collapsed and. While China announced retaliation and Mexico and Canada rates prepared their responses, investors considered a slowdown in global growth and increased expectations for US rates cuts.

The price of futures still implies around 75 basic points of the US cuts this year, compared to 50 PB two weeks ago, while 10 -year yields reached a minimum of 4½ months of 4,115 percent.

Investors see an uncertain perspective where the shelter is found in defensive sectors such as real estate or medical care. And, although protected companies such as American steel manufacturers can prosper, the highest prices will flow along supply chains with an unpredictable effect.

“I spend a lot of time talking to the CEOs who are really trying to understand the consequence of some of this,” said Goldman Sachs CEO, David Solomon, at the conference in Australia.

“Until there is more certainty, we have a little more track time. I think we are going to live with a slightly higher level of volatility. But I think he (Trump) has a determined direction that he is chasing, and we should take it in his word that he will follow that address. “

Difficult to trade

The fall of the dollar has been one of the most striking reversals as conviction becomes confusion in currency trade.

What, in January, had been the bet of the largest speculators in almost a decade has quickly ruled out, so much that, since last week, speculators were short dollars against the currencies of emerging markets and had a record position of long yen.

Against the euro, the dollar has dropped almost 1 percent in two commercial sessions as the fall in the yields of the United States has coincided with increases for European returns since the continent prepares to increase defense expense while Trump goes back from Ukraine.

In the White House, Trump pointed to China and Japan to keep their coins too cheap.

In fact, Yuan, against a basket of commercial partners coins, is historically firm and Japan has been intervening in recent years to buy the YEN.

But on Tuesday, as the dollar fell, the Global Interior Chief of Nomura, Hoe Lon Leng, said it looked like the “final blow” for those waiting for a higher dollar.

“That argument is decreasing and we continue to see that the price action moves to the other side,” he said, and pointed out that if China and the United States did not want to see that the dollar was taller against Yuan, “then it will go down.”

Without a doubt, the market turns have not been huge and many analysts still see space for commercial negotiations and a climbing ramp. But political whip has spread in the hope that investors had in an innovative agreement.

And nobody can say that you are sure Trump is slavery.

“The threat of tariffs has continued its course for now, so the next phase is to support them,” said Jamie Cox, managing partner of Harris Financial Group in Richmond, Virigina.

“The markets are priced at that reality, and those numbers are painted red.” – Reuters