Trump's Liz Truss moment?

He actually did it

The 104% tariff on China came into effect last night, and the result has been a fresh bloodbath in equities. Yesterday’s session had seen stocks rebound on hopes that negotiations between the US and key partners would begin, but the afternoon session in the US witnessed the eradication of the bounce as a wave of selling took hold following some poor bond auctions in the US. Far from backing down, the US president appears determined to double down on his tariffs.

Signs of bond market stress emerge

The irresistible force of Trump’s trade policy has hit the immovable object of the bond market. A continued surge in US yields has undermined any suggestion that Trump’s tariffs on China are not causing major concern among investors around the globe. US borrowing costs are rising rapidly, piling the pressure on Washington to react in some way to alleviate the growing crisis in financial markets.

Today’s focus is on the Fed and the 10-year auction at 6pm – this has moved from an equity market crisis to a bond market one, which is far more serious. Liz Truss was forced back down in 2022 when the tensions threatened to blow apart the UK financial system – will Trump have to do the same?