MARKET WRAP

He finally blinked. In this case it was a 90 day hold on the new tariffs (a half a day into them), excluding China (for now). Equities rallied massively on the news. For the day SPX +9.5%, QQQ +12%, and IWM +8.6%. The bond market may have played a significant role, particularly overnight, with troubling action reminiscent of crises in the past.

On the day, the 10Y yield was higher, now 4.34%, but that was well off last night’s highs. Gold and Oil both rallied more than +4%. Several Wall Street banks lowered recession odds. Tomorrow we get CPI, but with tariffs on hold (for now) reactions may be confusing. (more on trading after today’s rip and vol collapse at the bottom of the email)

• MRKT Call: Discussions on the troubling moves in treasuries, what levels a rally could get to on the upside and of course your questions.

• RiskReversal Pod: Coverage of Walmart's and Delta's announcements, the role of confidence in financial markets, the bond market's significance over the stock market, and the future of US debt management.

MRKT MATRIX: April 9, 2025

Today’s Top Stories:

• DOW SURGES 3,000 POINTS AFTER TRUMP'S TARIFF REVERSAL (CNBC)

• Goldman forecast a recession, then almost immediately rescinded it after Trump tariff pause (CNBC)

• Jamie Dimon warns recession is now 'a likely outcome' for US economy (Fox Business)

• Dalio Sees Once-a-Lifetime Collapse in Economic, Political Order (Bloomberg)

• Bonds crater, 10-year yield spikes briefly above 4.5% in confounding move that’s worrying Wall Street (CNBC)

• Walmart says Trump tariffs could hit quarterly profits as it tries to keep prices low (CNBC)

• Delta Pulls Outlook as Trump’s Trade War Squeezes Air Travel (Bloomberg)

Today’s MRKT Call is Presented by CME Group

Trump to Investors: 'Be Cool' and Buy Stocks

A discussion on the unique feel of the past 24 hours, a sense of unease in the bond market reminiscent of crises past and what’s next.

• Analysis: US10Y, TLT, VIX, SBUX, MCD, S&P e-mini, SOXX, NVDA, AAPL, 

• Call of the Day: Jeffries Upgrades Apple

• John Butters Report: A look at current forward P/E Ratios and and breakdown by sector, and where are now vs history. 

• Your Questions Answered: 

  • Thoughts on the 10Y Treasury auction today

  • If we see a recession PE of 15, do we see SPX 4000?

  • Do you think the “cash on the sidelines” is waiting for “the Santa rally”? :-)

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Today’s RiskReversal Podcast is Presented by Betterment and iConnections

Trade Wars and Treasury Yields: The Domino Effect on Global Markets

Dan Nathan and Guy Adami dive into recent market dynamics, focusing on the fluctuating US Treasury yields, the impact of the US-China trade war on the stock and bond markets, and corporate earnings reports. They discuss Walmart's and Delta's recent announcements, the economic implications of increasing tariffs, and the role of confidence in financial markets. The conversation highlights the bond market's significance over the stock market and touches on the future of US debt management. Additionally, they explore the influence of political decisions on economic policy and market performance.

Timecodes 

• 0:00 - Trade War Impact

• 24:00 - Single Name Impact

• 34:25 - Oil & Gold

What’s Next?

Clinton political strategist James Carville once said: “I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or as a .400 baseball hitter. But now I would want to come back as the bond market. You can intimidate everybody.”

The bond market’s action over the past few days — and especially last night — finally managed to spook the White House in a way the equity decline hadn’t. The White House blinked today, and we got a monster rally. The shift was hinted at in an early-morning tweet, which in hindsight was suggesting a de-escalation may be coming from D.C., and by the end of the day, we got confirmation.

That said, this wasn’t a resolution — just a pause. China tariffs remain in place. But markets likely won’t respond the same way next escalation, knowing now that the bluff can be called.

Looking Ahead: We’re clearly not out of the woods. Volatility will remain the base case, especially as economic data begins to reflect any damage. But for the foreseeable future, a VIX north of 50 may be behind us, and we could also be seeing the end of those historic moves in treasuries — at least for a bit. Looking further ahead, a VIX retreating into the low 20s might signal it's time to take profits. Conversely, any spikes to crazy vol levels could offer opportunities for re-buys. Of course, everything remains vulnerable to the next tweet — so flexibility is key.

Short Term Trading Strategy: Implied volatility is still extremely elevated, even with VIX now at XXX. On rallies, it may be worth laying off some premium through credit call spreads vs any stocks bought lower, especially around key support now resistance levels from the recent decline (think SPY 560 or QQQ 480) $1-wide spreads priced around 35 cents with 4-5 days to expiry can be had pretty far above the current spot prices in this type of vol environment.

Bottom line: the volatility isn’t over. A VIX at 33 is still really historically high, and there's plenty of short gamma out there — meaning fast, sharp moves in both directions are still very much in play. If the rally continues and VIX drops back into the low 20s, that could be your cue to start looking down again.



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