Powell’s Warnings Sink Stocks, Boost Gold and Bonds:
Federal Reserve Chairman Jerome Powell’s warnings that trade tensions could undermine the
central bank’s employment and price stability goals triggered a fresh wave of volatility on Wall Street Thursday.
U.S. stock indices saw another sharp drop, while safe-haven assets like Treasury bonds and gold surged.

Contents

Powell Disappoints Expectations

U.S. Indices Slide

Labor Market
Additional Comments

Escalating Volatility
U.S. Retail Sales Surge

Powell Disappoints Expectations for Fed Intervention

After two days of relative calm, pressure returned to the markets following Powell’s signals
of a “wait-and-see” approach regarding the tariffs imposed by President Donald Trump.
This dashed hopes for quick Fed action to reassure investors.
Losses that had started earlier in the session deepened after two major semiconductor
firms reported disappointing results linked to the global trade war.

During his appearance at the Economic Club of Chicago, Powell was asked whether he foresaw
a scenario in which the Fed would step in to calm the markets.
He replied, “No,” adding that there are still many unresolved questions about the impact of Trump’s policies.
He continued: “We don’t know that yet, and until we do, we can’t make well-informed decisions.”

U.S. Indices Slide Amid Chip Export Restrictions

The S&P 500 fell by 2.2%, while the tech-heavy Nasdaq 100 dropped by 3%,
following new White House restrictions on Nvidia’s chip exports to China.
Meanwhile, the yield on 10-year U.S. Treasury notes declined by about five basis points to 4.28%.

Labor Market “In a Good Place”

Despite recent developments, Powell emphasized that the labor market remains.
In a perfect place,” as job supply and demand are easing.
He expressed expectations for these conditions to persist.

Adam Phillips, Managing Director of Investment Strategy at EP Wealth Advisors, noted:
“Many assumed the Fed would prioritize the employment side of the dual mandate if forced to choose,
But Powell clarified that price stability is essential to maintaining a strong labor market.”

He added, “If you expect the Fed to step in and support the market,
you should lower your expectations as long as inflationary pressures remain high.
Don’t expect near-term monetary policy support.”

Michael Bailey, Director of Research at FBB Capital Partners, said:
“Powell threw stocks under the bus.”
adding, “This year has been full of letdowns—from disappointing tariffs to the Fed abandoning investors.
Powell ignored the market at a critical moment, as semiconductor stock shocks weigh on global sentiment.”

More Commentary and Pressure on Nvidia and ASML

Earlier, Beth Hammack, head of the Cleveland Federal Reserve,
expressed a similar stance, stating that interest rates should remain steady until the impact of the tariffs becomes clear.
Meanwhile, swap traders maintained their bets that the Fed will cut rates by a whole percentage point by January.

Nvidia’s losses deepened after Powell’s comments, with its stock falling more than 9%.
The company warned of $5.5 billion in costs tied to inventories and obligations related to its H20 chip this quarter.
Concerns grew further after ASML reported weaker-than-expected orders.

On Monday, the U.S. government informed Nvidia that exporting the H20 chip to China requires an “indefinite license.”
Nvidia disclosed that the new rules are based on Washington’s
concerns that “the products in question may be used in a supercomputing device in China, or redirected to one.”

Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank in Singapore,
said: “This move is alarming for two reasons: First, it highlights the erratic nature of Trump’s tariffs,
as prior concessions to Nvidia have been rolled back.
Second, it suggests that U.S.-China tensions are deep and ongoing, despite surface-level calm.”

Rising Volatility and Trade Contraction Fears

With volatility increasing, investors flocked to safe-haven assets such as gold,
which reached record levels, and the Swiss franc.
The U.S. dollar weakened amid escalating trade tensions, undermining confidence in the global reserve currency.

Among other pressures on riskier assets, the World Trade Organization revised its outlook for the year,
projecting that global trade will decline by 0.2% in 2025,
nearly three percentage points lower than previous forecasts if no new tariffs are imposed.

Reports also indicated that China is seeking a key figure and more tremendous respect
from the Trump administration before returning to the tariff negotiation table.

Solita Marcelli of UBS Global Wealth Management said:
“While we still expect trade talks to bear fruit eventually,
Brinkmanship between the U.S. and China appears set to continue in the near term.”

U.S. Retail Sales Surge

Meanwhile, U.S. retail sales rose 1.4% in March
The most significant increase in two years—as Americans spent heavily,
purchasing everything from cars to electronics in the days before President Trump’s tariff announcement.

Powell’s Warnings Sink Stocks, Boost Gold and Bonds

Powell&#8217;s Warnings Sink Stocks Boost Gold and Bonds

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Powell’s Warnings Sink Stocks Boost Gold and Bonds