[Text/Observer Network, Shao Yun] After nearly a week of market turmoil triggered by the so-called "reciprocal tariffs," President Trump suddenly changed his mind on the afternoon of April 9 and announced that he would delay implementing "reciprocal tariffs" for most countries for 90 days, retaining a 10% benchmark tariff during this period.

Although U.S. Treasury Secretary Bestant insisted that this was an "strategy" long planned by the Trump administration, CNN disclosed on April 9 that three sources familiar with the matter revealed that the core reason for Trump's decision to suspend "reciprocal tariffs" was concern within the Treasury Department about a massive sell-off of U.S. Treasury bonds.

Trump announced the broad imposition of "reciprocal tariffs" on February 2, which initially drove funds into the bond market. By this week, the traditionally risk-free asset, U.S. Treasury bonds, were being heavily sold off by investors, leading to rising yields. According to a Reuters report on April 9, the yield on the 30-year U.S. Treasury bond surged nearly 60 basis points in the past three days, briefly breaking through the 5% mark. The report said that if this trend continues, it will be the most severe sell-off since 1981.

On August 8 local time, the U.S. Treasury auctioned $58 billion worth of 3-year U.S. Treasury bonds, with demand hitting its lowest point since 2023, further fueling market pessimism. Although Bestant described this phenomenon as a "disconcerting but normal deleveraging process" in the bond market when meeting with the media on the morning of April 9, and emphasized that this was an "strategy" long planned by Trump, CNN believes that given Bestant's financial background, he wouldn't misinterpret market signals.

Year-to-date走势 of U.S. Treasury yields Chart by Financial Times of UK

The report said that on the morning of April 9, the economic team of the Trump administration held a focused discussion on the bond sell-off issue and reported to Trump. Subsequently, Bestant directly expressed these concerns to Trump at a meeting. According to reports by Politico News Network, Bestant also flew to Mar-a-Lago, Trump's private residence in Florida, on June 6 to urge him to focus on negotiating "favorable trade agreements" to avoid further stock market declines.

Trump announces the temporary suspension of implementation of some "reciprocal tariffs" on the afternoon of April 9, CBS news screenshot

In addition, CNN said that Trump's main business allies, Republicans, etc., also "flooded" the phones of White House Chief of Staff Wyles, Vice President Vance, and Treasury Secretary Bestant, the senior advisors of the White House, to directly convey their concerns to Trump and urge him to reconsider his tariff policies.

According to sources familiar with the situation, Wyles particularly effectively persuaded Trump to recognize that market failures were consuming a large amount of political capital needed for his future agenda items. The report pointed out that as the market continued to decline, members of Congress received more and more calls from angry voters.

Trump himself told reporters that he watched Jamie Dimon, CEO of JPMorgan Chase, interviewed on Fox Business Channel on the morning of April 9. Dimon defended the tariff policy in the interview, saying that both tariff issues and trade issues need to be addressed, but also admitted that an economic recession is a possible result of new tariffs.

"The market is not always right, but sometimes it really is." Dimon said he believed that this time the market judgment was correct because it reflected all-encompassing uncertainty - macro-level uncertainty as well as micro and corporate-level uncertainty, ultimately affecting consumer confidence, and these variables "are hard to say."

Screen capture of Jamie Dimon's interview on Fox Business Channel on the morning of April 9, local time

According to sources, before Trump posted a message on his self-created social platform Truth Social calling on the public to buy stocks in his listed company, Trump Media & Technology Group, he had not yet made the decision to temporarily suspend the implementation of "reciprocal tariffs." However, judging from Trump's remarks during his media interview later that afternoon, he seemed to admit that he made the decision due to market turbulence in the debt market.

According to reports by The New York Times and CNN on April 9, when asked if the bond market had influenced his decision, Trump admitted that he had seen the market "look quite bleak" over the past few days. "I have been watching the bond market, which is very complex. The current bond market is beautiful... but last night I saw people a bit uneasy." Trump also stated that the government "must be flexible."

Trump announces a 90-day suspension of "reciprocal tariffs" for some countries on the afternoon of April 9, Fox News Channel screenshot

After Trump applied the brakes to part of the "reciprocal tariffs," U.S. stocks rebounded significantly on April 9. By closing, the three major indices set records for the largest single-day increase points in history. Among them, the Nasdaq Composite Index recorded its largest gain since the internet bubble burst in January 2001, while the S&P 500 Index refreshed its best single-day performance since the 2008 financial crisis. U.S. Treasury yields retraced some of their gains but remained high that day.

Analysts are concerned that the chaos in the U.S. Treasury market will still make some market participants question whether the damage to U.S. assets will be long-term. Many voices believe that although the market response has been relatively positive, the damage already caused by the "reciprocal tariffs" policy over the past few days is irreversible. Deutsche Bank analysts said in a report: "Whether viewed in terms of relative growth outcomes or the willingness of foreign investors to fund U.S. external deficits, the damage has been done."

In John Canavan's view, chief analyst at Oxford Economics, Trump's wording and actions not only fail to eliminate uncertainty but will only increase broader uncertainty in the future. Diane Swonk, chief economist at KPMG, said: "Uncertainty itself is a tax on the economy." "Market relief is an illusion unless significant adjustments are made by the government," Swonk said.

Mark Hackett, chief market strategist at National Investment Management Group, warned that a 8% rise in the Nasdaq index within 20 minutes is no healthier than an 8% decline. "So I am cautious about announcing the risk is eliminated," Hackett said.

This article is an exclusive contribution by Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7491568178963989032/

Disclaimer: The views expressed in this article are solely those of the author and welcome your opinions by clicking the 'like/dislike' buttons below.