Bond Market Scares Trump into Abandoning Tariff Gamble

Trump is taking back his tariffs as bond market shakes

Last night, April 9th, 800 people turned out at the City North Hotel Conference Centre for Irish Reject Totalitarianism.

The presentation covered much ground with video clips from experts interviewed on Counterpoint but with a special focus on when, how and who sold out Ireland to stakeholder capitalism, subverting Irish democracy by stealth.

A raise of hands flagged only 15% had even heard of UN SDGs, the instrument advanced by Irish UN officials under which we are ruled from above.

If you haven't already done so, can you add 1215 to your profile on X, Facebook, Instagram or elsewhere to signal that you reject totalitarianism and cherish freedom? It's a small thing, but its growth has a multiplier effect to say ENOUGH, ENOUGH.

While we met, matters were unfolding elsewhere because of the start of a contagion in bond markets, which I explain here as best I can so you can pass it around.

Trump’s Reversal

President Donald Trump displays a signed executive order following his remarks on tariffs in the Rose Garden of the White House in Washington, DC, on April 2, 2025. Source: Carlos Barria/Reuters

At the Rose Garden on April 2nd, Trump administered an enforceable economic command to the rest of the world, since which markets have been all over the shop and will be until more hard data and certainty take hold.

Overnight the big beast, the bond market, gave its verdict, and Trump blinked.

He didn't have much choice because the stability of the global financial system and its banks, including your deposits, was coming into play.

The result, a 90-day reprieve on tariffs, is another arbitrary pronouncement, and while helpful in averting a crisis, it still leaves the legacy of Trump's lunge and his erratic behaviour as the most lasting impact.

Our recent 1215 bulletins covered the logical direction of his choice of a Big Bang and where which would take us, essentially into stagflation, with very low or negative growth (temporary recession) and higher inflation.

That was the best-case scenario; at worst, it could have triggered a global financial crisis if the bond market mothership, US treasuries, got sold off.

But we are not in a prescribed outcome; this is because of the Law of Unintended Consequences.

This law always applies when some authority attempts to command economic outcomes or impose its will on markets.

It is why I wrote the letters to Trump to explain it plainly – see attachment.

This is already starkly evident across a range of metrics.

Uncertainty is the enemy of reason, and no one knew if Trump’s gamble would work or how it might work, and because he is entirely unreliable, promises made one day can be reversed the next.

It is that mercurial behaviour that mitigates against consumer, business, and nation’s confidence in anything he commands, that he has set the Oval Office up like a TV studio with a daily episode worsened by the Zelenskyy treatment and followed by callow visits from a host of supplicant prime ministers, including a bowl of shamrocks from ours. 

Throughout the world, decisions are on hold everywhere, not just in boardrooms still undertaking studies trying to figure out bottom lines within hugely complex global supply chains from the US tariffs.

It also includes nations trying to assess what to do and how it will impact revenues and taxes upon their people; then there’s the individual consumer uncertainty.

Ask yourself if you were about to buy your home for your young family near the Pfizer plant in Ringaskiddy, County Cork, would you delay for fear of losing your pharma job there?

Be clear: job losses were coming and only now are on hold pending the outcome of the next phase.

This is not an environment where businesses will decide on major investments; the point is that much of the damage is already done.

These micro-decisions are being made everywhere in the world all at once, and reliable economic data points have not yet caught up.

Until that catch-up flows through in data and will take several weeks yet, we must rely on economic first principles and past history to assess the outcome on this path and its off-ramps.

After just one week, Trump’s gamble was beginning to get into early trouble.

Firstly, on the political side, major billionaire backers were already yelling, and if the USA tiptoes towards a recession, even if short and shallow, the whole political calculus will shift to a headwind because it takes at least a year to wear off a recession, and that puts its nasty political effect smack into the mid-term elections of 2026.

MAGA’s who lose their jobs will quickly put their red caps into the car boot if that happens.

Secondly, financial markets being forward-looking are in high volatility because of the uncertainty of the outcome and the absence of meaningful data, as no one knew if the tariffs, even if paused, are a negotiation point or a coercion, in other words, a cliff fall.

It is a small wonder that stock markets are displaying erratic movement but have been sharply down, and in the background, credit markets then caught the contagion of uncertainty.

Over the past day the US Treasury market bond yields spiked because of selling to cover speculation losses.

This marks the capitulation of huge multi-trillion-dollar positions betting on the spread between US bonds and the futures market. Bets you can buy (using borrowed money) on the gap between the real market and the imagined future one.

This too will pass, but not its knock-on stress if it whipsaws into bank stability, which was en route to manifest in sharp falls in bank shares everywhere.

Everything is interconnected, and you can be pretty sure Trump took some extremely serious phone calls from global bank stability experts like those from the Financial Stability Board, the Fed and US regulators, each seeing the same outcome if he persisted with his intransigence in denying basic economic science.

We have been here before – government bonds are the backstop to the entire global financial system, and US bonds are the mothership.

It is why Democrat advisor James Carville once famously quipped about his next life,

“I would like to come back as the Bond Market. You can intimidate everybody.”

The US Fed would have been forced to intervene, essentially to save Trump 2.0, and if that happened, it could well have been Trump's Liz Truss moment.

It is why everyone fears bond markets, the world's creditors, essentially.

If there’s any chance of another bank contagion, global central banks would turn on the printing presses all over again but next time only save banks of systemic importance.

For the moment, government bonds will remain the safe haven for capital flows on the truism that, although bank runs can cause closures, major governments never close; they just raise more taxes.

This extraordinary period could not continue for too long before Trump blinked under political and bond market pressure in his sprint to a moment when the rest of the world would bend the knee.  

Needless to say, I will continue to issue bulletins as events unfold and to delve beneath the surface coverage in mainstream news.

If you’d like to go into more detail or undertake an overall strategic review, you can contact my financial firm Hobbs Financial Practice Ltd at +353 (45) 409354 or eddie@eddiehobbs.com.

Until next time,

Eddie