Latest news with #Yardeni
CNBC
3 days ago
- Business
- CNBC
Everyone is talking 'TACO' trade. Investors say don't count on Trump chickening out
"Trump Always Chickens Out," or TACO, is a gibe that has ruffled the U.S. president's feathers, and investors have, by now, seen it happening enough times to know his playbook. The phrase, coined by a Financial Times columnist, refers to Donald Trump's pattern of threatening steep tariffs that rattle markets, only to ease or postpone them after a sharp market sell-off, prompting a recovery. "Trump's style in negotiating deals is he huffs and he puffs, but he doesn't blow the house down," Ed Yardeni, president of Yardeni Research, told CNBC. In February, Trump announced a 25% tariff on imports from Canada and Mexico, before swiftly putting them on a 30-day pause just days later. And in early April, Trump slapped tariffs on more than 180 countries while escalating a tariff tit-for-tat with China, sending shock waves across financial markets. Global equities had a bloodbath in the days that followed. The U.S. benchmark S & P 500 fell about 12% between April 2 and April 8, and the MSCI world index excluding the U.S. fell over 8% in the same period. U.S. government bonds had a sell-off too. Yields on the benchmark 10-year yield jumped 10 basis points between April 2 and April 8, and the 20-year yield rose around 20 basis points, according to data on LSEG. Three stages of market reactions Then, on April 9, the president surprised markets yet again by cutting tariffs to 10% for nearly all U.S. trading partners for 90 days, leading to one of the biggest rallies on Wall Street . More recently, Trump announced 50% tariffs on goods from the European Union last Friday, sending investors trembling during the long holiday weekend, before walking back on the decision Sunday evening. U.S. equities rallied the following Tuesday, the week's first day of trading after a holiday. Trump has realized that the stock and bond markets can have a powerful influence on his decision-making, Yardeni said, adding that the bond market had "forced" the president's hand to postpone "reciprocal tariffs" by 90 days. "He bullies, he threatens. But there are checks and balances to what he can do as President," Yardeni said. The U.S. federal court ruled on Wednesday that Trump overstepped his legal authority in imposing "reciprocal" tariffs. There are three distinct stages of market reactions when it comes to TACO, said Aberdeen Investments' Ray Sharma-Ong, head of multi-asset investment solutions in Southeast Asia. First, an initial aggressive Trump policy rollout is accompanied by a sharp risk-off sentiment. That's followed by a policy walkback and a consequent rebound in equities. The last stage is a "post-walkback ambiguity," in which investors adopt a wait-and-see approach after the initial market rebound, attempting to price in Trump's next move, Sharma-Ong said. Trust issues with Trump That uncertainty makes TACO a problematic bet, market watchers said. "One day tariffs go up, the next they're 'negotiable.' It's very difficult to build conviction-based positions when the policy direction keeps shifting," said Brian Arcese, portfolio manager at Foord Asset Management. Trump's approach is also denting traders' confidence in U.S. policy and U.S. assets, said UBP's head of equity research in Asia, Calder Kieran. That was the case in April, when a U.S. asset exodus occurred, leading to a weakening of the dollar and a spike in U.S. Treasury yields. While those pullbacks create attractive opportunities to allocate or enter a position in certain stocks, investors reiterated that they are sticking with the fundamentals. "There certainly is a pattern here but I would not always count on the 'Trump put' to happen," said Kai Wang, Morningstar's Asia equity market strategist, suggesting that investors stick with high-quality stocks with less drawdown during bear markets. TACO is essentially a punchier version of the Wall Street coinage, "Trump put" — in other words, when markets start to fall and Trump acts to turn them around. "It may be dangerous to believe that a Trump put is set in stone," said Nomura's head of global macro research, Rob Subbaraman. That's because his administration's negotiating power weakens as markets and foreign governments increasingly believe in the Trump put, making it a less viable strategy for him to employ, Subbaraman explained. Billy Leung, investment strategist at Global X, is, likewise, skeptical about the long-term viability of the Trump put. "The market's reaction to tariffs has evolved. It's not just a fade-the-headline play anymore. The Trump put has weakened," he said. Investors should therefore move away from import-dependent names and toward companies that are actively rerouting supply chains and accelerating investment in reshoring sensitive sectors, Leung added. "Corporates are not waiting for clarity," he said.
CNN
5 days ago
- Business
- CNN
Stocks zoom higher after Trump hits pause on his EU tariff threat (again)
Rinse, repeat. Stock futures rose Tuesday after President Donald Trump did a 180-degree turn on his threat to place a massive 50% tariff on goods imported from the European Union. Dow futures were up 600 points, or 1.3%. The broader S&P 500 futures rose 1.5% and Nasdaq futures were 1.6% higher. Investors cheered in their first day of trading since Trump on Sunday delayed EU tariffs until July 9. He had initially said they'd go into effect next week. US markets were closed for Memorial Day on Monday, so Tuesday is the first chance for Wall Street to react since the on-again, off-again tariffs went off, again. If this feels familiar, that's because this narrative continues to play out over and over again during the Trump administration. The president continues to threaten tariffs, markets react — sometimes severely — and the president often walks back his pledge, giving markets a sigh of relief. That's why, after nearly plunging into a bear market in April, markets have largely rallied since Trump paused his 'Liberation Day' tariffs and announced trade talks — and even a couple of deal frameworks with the United Kingdom and China. But several mini-threats and pauses since then have sent markets on a roller coaster. Also helping stocks Tuesday: a breather for the beleaguered bond market. Yields, which trade in opposite direction to prices, fell Tuesday on some relief from Trump's pause on his suddenly reignited trade war. The 30-year yield fell below 5%, and the 10-year yield fell below 4.5% — both psychological levels that had worried investors for a couple weeks, particularly after Trump and Republicans' 'Big Beautiful Bill' threatened to increase America's debt by nearly $4 trillion over the next decade. US bonds also bounced back after Japan's bonds rallied on some signs from the country's finance ministry that it may invest more in foreign bond markets a day after it reported Germany eclipsed Japan as the world's largest debt financer — a title Japan had held for 34 years. The dollar, which had also been squeezed in recent weeks on debt and trade war concerns, rallied a little on Tuesday. But market analysts were cautious about the staying power of Tuesday's relief rally, given Trump's ability to change the narrative on a dime. They also continue to worry about the trade war and America's unsustainable debt situation. 'We view the current period as still the 'calm before the storm,' and we expect growth in the second half of the year to weaken,' said Nathan Sheets, global chief economist at Citigroup, in a note to investors Tuesday. 'We remain concerned about potential downside risks.' Market veteran Ed Yardeni this weekend warned clients to 'buckle up, again' after Trump's Friday tariff threat. 'Stock investing is likely to continue to feel like riding a mechanical bull in a rowdy sports bar. Keep focused on not falling off the bull!' Yardeni wrote in a note. Yardeni said he remains bullish on US stocks but cautioned that Trump 'needs to declare victory' in his trade war before the end of the summer to 'avoid a recession later this year.' CNN's Matt Egan contributed to this report.
CNN
5 days ago
- Business
- CNN
Stocks zoom higher after Trump hits pause on his EU tariff threat (again)
Rinse, repeat. Stock futures rose Tuesday after President Donald Trump did a 180-degree turn on his threat to place a massive 50% tariff on goods imported from the European Union. Dow futures were up 600 points, or 1.3%. The broader S&P 500 futures rose 1.5% and Nasdaq futures were 1.6% higher. Investors cheered in their first day of trading since Trump on Sunday delayed EU tariffs until July 9. He had initially said they'd go into effect next week. US markets were closed for Memorial Day on Monday, so Tuesday is the first chance for Wall Street to react since the on-again, off-again tariffs went off, again. If this feels familiar, that's because this narrative continues to play out over and over again during the Trump administration. The president continues to threaten tariffs, markets react — sometimes severely — and the president often walks back his pledge, giving markets a sigh of relief. That's why, after nearly plunging into a bear market in April, markets have largely rallied since Trump paused his 'Liberation Day' tariffs and announced trade talks — and even a couple of deal frameworks with the United Kingdom and China. But several mini-threats and pauses since then have sent markets on a roller coaster. Also helping stocks Tuesday: a breather for the beleaguered bond market. Yields, which trade in opposite direction to prices, fell Tuesday on some relief from Trump's pause on his suddenly reignited trade war. The 30-year yield fell below 5%, and the 10-year yield fell below 4.5% — both psychological levels that had worried investors for a couple weeks, particularly after Trump and Republicans' 'Big Beautiful Bill' threatened to increase America's debt by nearly $4 trillion over the next decade. US bonds also bounced back after Japan's bonds rallied on some signs from the country's finance ministry that it may invest more in foreign bond markets a day after it reported Germany eclipsed Japan as the world's largest debt financer — a title Japan had held for 34 years. The dollar, which had also been squeezed in recent weeks on debt and trade war concerns, rallied a little on Tuesday. But market analysts were cautious about the staying power of Tuesday's relief rally, given Trump's ability to change the narrative on a dime. They also continue to worry about the trade war and America's unsustainable debt situation. 'We view the current period as still the 'calm before the storm,' and we expect growth in the second half of the year to weaken,' said Nathan Sheets, global chief economist at Citigroup, in a note to investors Tuesday. 'We remain concerned about potential downside risks.' Market veteran Ed Yardeni this weekend warned clients to 'buckle up, again' after Trump's Friday tariff threat. 'Stock investing is likely to continue to feel like riding a mechanical bull in a rowdy sports bar. Keep focused on not falling off the bull!' Yardeni wrote in a note. Yardeni said he remains bullish on US stocks but cautioned that Trump 'needs to declare victory' in his trade war before the end of the summer to 'avoid a recession later this year.' CNN's Matt Egan contributed to this report.
Yahoo
22-05-2025
- Business
- Yahoo
A tepid US Treasury auction is rattling markets with deficit fears running high
Stocks and bonds dropped on Wednesday after a Treasury auction was met with weak demand. The 10- and the 30-year bond yields spiked higher after jumping earlier in the day on deficit fears. The tepid bond sale adds to concerns that the US fiscal picture could worsen. Stocks tumbled and bond yields spiked on Wednesday after a weak US government bond auction rattled investors and added to concerns about America's fiscal situation. A $16 billion auction of 20-year Treasurys was met with weak demand. The US sold the bonds at a rate over 5%, the highest rate on the 20-year since 2020, according to Bloomberg. The 10-year yield spiked 11 basis points to 4.595%, and the 30-year also rose 12 basis points to 5.089%. This embedded content is not available in your region. The surge in yields sent stocks tumbling later in the trading session Here's where major US indexes stood at the 4 p.m. ET closing bell on Wednesday: S&P 500: 5,844.61, down 1.61% Dow Jones Industrial Average: 41,860.44, down 1.91% (-816.80 points) Nasdaq Composite: 18,872.64, down 1.41% A sell-off in bonds had resumed earlier in the day after pausing on Tuesday, as chatter over the US budget and the House GOP tax bill fueled more concerns about the deficit. Bond yields, which move inversely to prices, climbed earlier on Wednesday as traders surveyed the outlook for the US fiscal situation. A sweeping fiscal package that's moving through Congress has been inching forward, driving renewed fears that the US could see trillions added to the deficit in the next 10 years. Investors have grown anxious in the last few days about the Republicans' tax bill winding its way through Congress. Worries are growing about the long-term trajectory of the US deficit, which economists have warned about for years. The tax bill in its current form could add nearly $4 trillion to the national debt balance over the next decade, according to a projection from the Tax Foundation. Bond vigilantes — investors who protest policy by selling bonds and driving yields higher — are homing in on the tax bill given its impact on the safety and sustainability of US debt, according to Ed Yardeni, a market veteran and the president of Yardeni Research. "I think the perception is we really risk trouble if Washington doesn't do something more meaningful about narrowing the deficit," Yardeni told Business Insider in an interview last week, speculating that the 10-year yield could rise as high as 5%. "The administration is recognizing that the bond market, that the bond vigilantes are a force to be reckoned with," he added. "The bond vigilantes continue to lurk," Michael Brown, a senior research strategist at Pepperstone, wrote in a note on Wednesday. "Clearly, President Trump somewhat laughably claiming to be a 'fiscal hawk' while also trying to pass a $5tln tax cut hasn't exactly reassured market participants." Bonds have been on a roller coaster this year on fears about tariffs, inflation, and America's fiscal situation. The yield on the 10-year US Treasury edged close to 5% in the weeks before Trump's inauguration, partly because investors were anticipating the inflationary impact of some of the president's proposed policies. Since then, yields have whipsawed, with notable spikes occurring when the president announced his April 2 tariffs and when Moody's downgraded the US's debt rating last Friday, adding to concerns over the government's ability to keep borrowing at high levels. President Donald Trump's team has suggested he's keeping an eye on the bond market this year, particularly the 10-year US Treasury yield, which is an indication of long-term interest rates in the economy. The bond market got credit for helping to rein in the president's tariff policy in the early days of this trade war last month, with Trump pausing most tariffs for 90 days after a sharp sell-off that sent yields spiraling higher. Read the original article on Business Insider
Yahoo
22-05-2025
- Business
- Yahoo
A tepid US Treasury auction is rattling markets with deficit fears running high
Stocks and bonds dropped on Wednesday after a Treasury auction was met with weak demand. The 10- and the 30-year bond yields spiked higher after jumping earlier in the day on deficit fears. The tepid bond sale adds to concerns that the US fiscal picture could worsen. Stocks tumbled and bond yields spiked on Wednesday after a weak US government bond auction rattled investors and added to concerns about America's fiscal situation. A $16 billion auction of 20-year Treasurys was met with weak demand. The US sold the bonds at a rate over 5%, the highest rate on the 20-year since 2020, according to Bloomberg. The 10-year yield spiked 11 basis points to 4.595%, and the 30-year also rose 12 basis points to 5.089%. This embedded content is not available in your region. The surge in yields sent stocks tumbling later in the trading session Here's where major US indexes stood at the 4 p.m. ET closing bell on Wednesday: S&P 500: 5,844.61, down 1.61% Dow Jones Industrial Average: 41,860.44, down 1.91% (-816.80 points) Nasdaq Composite: 18,872.64, down 1.41% A sell-off in bonds had resumed earlier in the day after pausing on Tuesday, as chatter over the US budget and the House GOP tax bill fueled more concerns about the deficit. Bond yields, which move inversely to prices, climbed earlier on Wednesday as traders surveyed the outlook for the US fiscal situation. A sweeping fiscal package that's moving through Congress has been inching forward, driving renewed fears that the US could see trillions added to the deficit in the next 10 years. Investors have grown anxious in the last few days about the Republicans' tax bill winding its way through Congress. Worries are growing about the long-term trajectory of the US deficit, which economists have warned about for years. The tax bill in its current form could add nearly $4 trillion to the national debt balance over the next decade, according to a projection from the Tax Foundation. Bond vigilantes — investors who protest policy by selling bonds and driving yields higher — are homing in on the tax bill given its impact on the safety and sustainability of US debt, according to Ed Yardeni, a market veteran and the president of Yardeni Research. "I think the perception is we really risk trouble if Washington doesn't do something more meaningful about narrowing the deficit," Yardeni told Business Insider in an interview last week, speculating that the 10-year yield could rise as high as 5%. "The administration is recognizing that the bond market, that the bond vigilantes are a force to be reckoned with," he added. "The bond vigilantes continue to lurk," Michael Brown, a senior research strategist at Pepperstone, wrote in a note on Wednesday. "Clearly, President Trump somewhat laughably claiming to be a 'fiscal hawk' while also trying to pass a $5tln tax cut hasn't exactly reassured market participants." Bonds have been on a roller coaster this year on fears about tariffs, inflation, and America's fiscal situation. The yield on the 10-year US Treasury edged close to 5% in the weeks before Trump's inauguration, partly because investors were anticipating the inflationary impact of some of the president's proposed policies. Since then, yields have whipsawed, with notable spikes occurring when the president announced his April 2 tariffs and when Moody's downgraded the US's debt rating last Friday, adding to concerns over the government's ability to keep borrowing at high levels. President Donald Trump's team has suggested he's keeping an eye on the bond market this year, particularly the 10-year US Treasury yield, which is an indication of long-term interest rates in the economy. The bond market got credit for helping to rein in the president's tariff policy in the early days of this trade war last month, with Trump pausing most tariffs for 90 days after a sharp sell-off that sent yields spiraling higher. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
