Whiplash on Wall Street: Bond yields surge, stocks rebound off the lows — Storm over or just the calm before?

Markets

Stocks stayed jumpy into the close, finishing lower but well off the session lows. The S&P 500 flirted with a third straight deep red day — and a full-blown bear market tag — but clawed back to finish down just 0.2%. The Dow gave up 349 points as the chop continues.

The catalyst? A messy cocktail of tariff headlines. Trump hinting he might soften his trade stance triggered a violent $2 trillion round-trip in equities, after false chatter about a potential 90-day tariff pause hit the wires. But the tone turned muddled fast, with mixed signals from White House insiders throwing cold water on the idea that a pivot is imminent.

Markets are desperate for clarity — and until we get it, this kind of headline-driven whiplash is the playbook.

Recap

Trump’s tariff hammer is no longer just policy — it’s a bearish wrecking crew tearing through global markets. What started as a “reciprocal” adjustment has turned into full-blown equity carnage. Monday's session delivered another gut punch as cross-asset bleed hit escape velocity.

Let’s run the tape:

• Hang Seng? Obliterated. Down 13.3%, the biggest hit since the 1997 Asian FX crisis — and the second-worst drop in 35 years.
• Nikkei 225? Crushed. Off 7.8%, now nearly 20% lower in under two weeks. That’s bear market territory — fast.
• Taiwan? Record books rewritten. Down 10% in a single session — the worst daily drop ever.
• China? Saved by the bell. Official sector buying stepped in to stem the slide — but the pressure’s still building.
• MSCI Asia ex-Japan down 8.4%, steepest fall since Lehman-era 2008. Same for MSCI EM, which tanked 8%.
• Wall Street? Red tape city. At one point, losses hit 5% intraday, with the VIX spiking to 60 — that’s panic-mode vol.
• Treasury yields? Bear steepening. Up to 25 bps higher across the long end — not exactly your classic flight-to-safety.
• High yield credit? Buckling. Spreads have blown out 100+ bps since “Liberation Day,” now sitting at 445 bps — the weakest links are snapping.
• Gold? Liquidated again. Down 2%+ for a second straight session. That hasn’t happened in four years. The margin calls are real.
• Dollar? Wrecking EM. USD ripped across the board. Brazil’s real sliced its YTD gains in half. The rand? Sinking fast, down nearly 4% YTD.

And all this while Trump is doubling down — threatening more tariffs on China but showing some inclination to negotiate with allies. Risk-off isn't even the proper term anymore — that was a risk-avalanche.

Forget the debate over whether this is trade “policy” — this is now a systemic macro event. The only question is who blinks first: the White House or the Fed.

Either way, this is a textbook sentiment shock. Welcome to Trade War 2.0.

Markets didn’t just wobble Monday — they got steamrolled. Trump’s tariff wrecking ball took another swing, tearing through stocks, bonds, and commodities with surgical precision. It was a cross-asset bloodbath, and the tape was pure chaos.

The S&P 500 teased full-blown bear market status before pulling off a whiplash intraday reversal — the biggest since the pandemic panic of 2020. Bottom-to-top moves like that don’t happen in calm markets — that was fear-driven positioning getting bought by cooler heads in real time.

But the real twist? Treasuries caught a bid early, only to get faded hard — long-end yields reversed and ripped 10 to 20bps higher. Why? The full-blown panic around systemic risk cooled just enough to take the crash premium out of bonds. In other words, the market exhaled enough to turn the tape.

The tape’s still jittery. Risk appetite remains pinned down by tariff landmines and political crossfire. The good news? The plumbing’s holding. No signs (yet) of credit freeze or repo stress. But let’s not kid ourselves — we’re still deep in the fog. No Fed pivot, no White House rollback, no coordinated rescue. Until that shows up, every rally’s rented, and every dip comes with sharp elbows— let’s be clear: volatility is the only asset class long and strong.

Dollar exposure’s getting whippy — But there’s a trade taking shape

The tug-of-war in Treasuries isn’t done yet. Plenty of noise about 10s breaking toward 3.5%, but unless the floor gives way fast, we’re not buying it. The tape’s telling a different story — and so is the curve.

Let’s start with breakevens. If tariffs are inflationary, someone forgot to tell the market. Breakevens were rolling over — a clean disinflation signal that macro malaise is steering the ship. That’s buying Treasuries some time, even if the fiscal re-leverage wave eventually drags yields back north.

Treasuries are clearly getting de-rated and not so quietly as supply looms — $119 billion hits this week. Add in the smoke around sovereign wealth funds de-risking, and suddenly,, every bid-to-cover becomes a sentiment check. But counting the sovereign wealth fund news as echo chamber noise, the rise in US yields could be a sign that the market’s already sniffing the bottom of this economic drawdown with recession odds not rising above a coin toss.

For the dollar bears, you’re not off the hook. The cross-currency basis is back in motion — Translation? Dollar access is starting to matter again. This isn’t a panic premium, but it is a stress signal. In noisy tapes, the buck still buys you optionality. Not strength, not growth — just clean liquidity when the screen bleeds.

And for those just tracking dollar momentum through the lens of U.S. equities — don’t sleep on the skeleton risk. If this political mess morphs into a full-blown financial crisis, that dollar bid won’t just be about liquidity — it’ll be about safety. Think SVB-style panic, but scaled up. When something breaks, the bid flips from opportunistic to existential. The Greenback becomes a lifeboat, vault, and triage unit all in one.