Trump Escalation Shakes Markets, Gold at Record High: Global markets experienced sharp turbulence
Early this week, after U.S. President Donald Trump intensified his attacks on Federal Reserve Chairman Jerome Powell.
The escalation fueled fears of politicized monetary policy and deepened concerns about a multi-front trade war.
Investors rushed into traditional safe havens such as gold, the Swiss franc,
and sovereign bonds from Europe and Japan as U.S. stocks, the dollar, and Treasury bonds fell.

Contents

Broad Sell-Off

Gold Soars, Franc and Yen Advance

Concerns Over Powell’s Dismissal

Credit Market Weakness
Oil and Currencies in Motion

Asian Markets
Ongoing Trade War

Trade Partners

Tesla Declines
Conclusion

Widespread Sell-Off in U.S. Markets

U.S. stock indices plunged on Monday,
The S&P 500 dropped over 2.5% in a low-volume session due to the Easter holiday.
The 10-year Treasury yield fell to 4.4%, and the dollar index hit a 15-month low.
Long-term Treasury bonds also declined, reflecting growing investor distrust in U.S. debt instruments.

Gold Soars, Franc and Yen Gain Strength

Amid market turmoil, gold surged to a record $3,444 per ounce after climbing 2.9% daily.
The Swiss franc appreciated by more than 1% against the dollar.
Meanwhile, a stronger yen pressured Japanese equities, with the Nikkei 225 falling 1.3%.

Deutsche Bank says some Chinese clients have reduced their U.S. Treasury holdings,
favoring high-quality European bonds, Japanese government bonds, and gold as safer alternatives.

Concerns Over Powell’s Dismissal and Fed Independence

With a post on Truth Social, Trump reignited political and financial tensions,
claiming inflation was “almost non-existent” and calling for a preemptive rate cut.
Kevin Hassett, Director of the National Economic Council,
stated that Trump was exploring legal grounds to remove Powell,
raising alarms over the Fed’s future independence.

Economists and analysts warned of the implications.
Michael Brown from Pepperstone said Powell’s removal would trigger a “dramatic market shock,”
and Paul Singer of Elliott Investment Management
warned it could threaten the dollar’s role as the global reserve currency.
Christopher Wong of OCBC Bank warned that politicizing monetary policy could “deeply undermine trust in the dollar.”

Chicago Fed President Austan Goolsbee reaffirmed the necessity
of keeping monetary policy free from political interference, calling it a key pillar of economic stability.

Credit Market Weakness and Canceled Issuances

Market pressure extended into credit markets.
The cost of insuring investment-grade bond portfolios rose to its highest in over a week.
Of three firms planning bond sales,
two withdrew due to unfavorable market conditions,
while only American Express proceeded with its offering

Oil and Currencies Move as Europe Stays Closed

West Texas Intermediate (WTI) crude oil prices dropped more than 2%,
falling below $64 per barrel. European markets remained closed for a public holiday,
while all G10 currencies appreciated against the dollar.

Cautious Repricing in Asian Markets

During Tuesday’s trading in Asia, U.S. equity futures rose modestly,
Treasury yields stabilized, and gold and oil reached new record highs.
Market participants appeared cautiously optimistic.

Trade War Pressures and ETF Disparities

Despite Trump’s assertions that tariff negotiations were progressing,
Market pressure persisted.
A report from Bespoke Investment Group revealed that the ETF tracking the S&P 500
had the second-worst performance among 45 country-specific
ETFs since the beginning of Trump’s second term, with a 15% decline.
In contrast, BlackRock’s ETF tracking the German market rose by 11%.

Trade Partners Push Back

In Tokyo, Japanese Prime Minister Shigeru Ishiba said Japan would
not offer further concessions in tariff negotiations, warning that talks with Washington could be prolonged.
A recent survey showed that 10% of Japanese companies had already suffered from Trump’s trade measures.

Finance Minister Katsunobu Kato added that Japan was coordinating
with other countries to voice these concerns at upcoming meetings in Washington.
Meanwhile, Bank of Japan officials said they saw no need
to alter their gradual rate-hike policy despite U.S. tariff-related uncertainty.

Tesla Stock Falls Amid Leadership Criticism

Tesla shares declined 6.8% amid anticipation of upcoming earnings results.
Dan Ives of Wedbush Securities warned that the company is at a “crossroads,”
urging CEO Elon Musk to focus more on Tesla’s operations and less on his public sector efficiency initiatives.

Conclusion: A Confidence Crisis Rocking Global Markets

President Trump’s aggressive stance toward the Federal Reserve
and lingering uncertainty over U.S. trade policy has shaken investor confidence in traditional U.S. assets.
In the face of mounting tension on multiple fronts,
safe havens such as gold, the Swiss franc,
Foreign sovereign bonds are emerging as preferred choices for risk-averse investors.

Trump Escalation Shakes Markets, Gold at Record High

Trump Escalation Shakes Markets Gold at Record High

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