U.S. President Donald Trump wasted no time implementing his agenda as his second Oval Office term commenced. As part of his “Make America Great Again” policies, Trump has shredded the playbooks that have governed international trade and, indeed, the world order for decades.
His erratic, and often confusing, rollout of tariffs has hit countries ranging from the largest U.S. trading partners, like Canada, Mexico and China, right down to tiny icy islands inhabited only by penguins. The result – almost unprecedented market volatility and serious damage to investor trust in U.S. assets.
The mighty S&P 500 is flirting with bear-market territory, while the dollar falls toward four-year lows. More worryingly from the point of view of broader market stability, U.S. Treasuries, the bedrock of the global financial system, are bruised from one of their worst selloffs in decades.
As Trump seeks to rewrite the rules for global trade, security and international relations, a whole range of dynamics have emerged as the 47th president approaches 100 days in office on April 30.
Tariffs sent the stock market into chaos
Global investors are pulling money out of the U.S. stock market at an almost unprecedented rate. They’re also selling U.S. Treasuries, which suffered one of their worst routs in decades and added pressure on equity valuations. As investors’ ability to figure out the Trump administration’s next move has disappeared, volatility has skyrocketed.
Market volatility has spiked under Trump 2.0
The CBOE Volatility Index measures S&P 500 price swings, with higher readings indicating increased market instability.
The CBOE Volatility Index, often called Wall Street’s “fear gauge”, jumped over 50, its highest since the COVID-19 pandemic five years ago, signaling deep investor unease. It has since retreated to around 30 but is well above its long-term median level of 17.6, according to LSEG Datastream.
Companies are also scrambling to avoid the worst of the tariffs, when they eventually hit. For example, Apple’s suppliers in India rushed to ship nearly $2 billion in iPhones to the U.S. in March. Analysts say more volatility may lie ahead if trade tensions escalate.
The impacts are global, but the U.S. is bearing the brunt
One of the major upsets for markets since Trump took office has been the rapid unwinding of the “U.S. exceptionalism” narrative. For years, U.S. stocks had been a must-have for portfolio managers everywhere, who were drawn in by Wall Street’s lofty valuations and the winning performance of Big Tech. Once the AI boom began to gather momentum a couple of years ago, there was really only one market in town – the U.S.
Trump’s range of “America First” policies, and the uncertainty and volatility they have brought, have hurt stock markets around the world, but the S&P 500 has been one of the worst hit.
Since Trump’s term began, the index has fallen almost 11%, drastically underperforming much of the rest of the world. Europe’s STOXX 600, which, having trailed the U.S. market for years, is down 1.4% in that time, while Chinese blue chips, the most exposed to the global trade war, are down just 1.1%. The blow for foreigners has been even harsher. In euros, yen and pounds, the S&P has lost over 17% at this point in Trump’s second term.
The dollar is losing ground fast
The speed at which the dollar has fallen has been staggering. Its 9% slump against the world’s other top currencies since January is its worst start to any year since 1971, when the U.S. abandoned the Gold Standard.
The ratcheting up of criticism of Federal Reserve Chair Jerome Powell has thrown fuel on the flames. It has shoved the greenback down 4% in April alone. Barring a late recovery that would be its biggest drop since late 2022, or if the slide continues, the depths of the global financial crisis in mid 2009.
Bonds are also behaving unexpectedly
Underscoring the real-time risk to the safe-haven status of U.S. assets, 10-year Treasury bond yields – which drive global borrowing costs and traditionally fall during periods of turmoil as nervous investors buy the bonds for their guaranteed income – saw their biggest weekly surge in more than 20 years this month.
Significant uptick in U.S. Treasury yields after tariffs announcement
Change in 10-year bond yields since the beginning of Trump’s second term for each country
That kind of combination of a currency tumbling and the government’s borrowing costs shooting up is something usually associated with crisis-threatened developing economies, not the world’s financial hegemon.
Some safe havens are thriving
Trump’s actions haven’t been negative for everyone. Classic safe-havens like gold, the Swiss franc and the Japanese yen have dazzled over these first 100 days.
Gold has hit record after record, reaching $3,500 per ounce as it builds on a strong rally in 2024. As of April 23, it has surged by 21.4% since Trump took office on January 20.
Gold has spiked under Trump
Percent change in the price of gold, typically a safe-haven investment, in the first 100 days of each presidency.
