Trade war risks slowing US growth, causing market turmoil, with Treasuries outperforming stocks

From Yahoo Finance: 2025-03-30 15:00:00

The escalating global trade war is increasing the risk of a significant growth slowdown in the US, causing turmoil in the markets. Bonds have outperformed stocks this quarter, with US Treasuries gaining over 2% while the S&P 500 fell by about 5%. As President Trump implements tariffs, more than $5 trillion has been wiped off US stock market valuations. Investors are turning to bonds as a safer bet amidst the uncertainty. The return of the traditional correlation between stocks and bonds is a relief for investors, with bonds offering a real return and downside protection. Bond yields are down, with five-year notes leading the rally and proving to be a resilient choice among Treasuries. Traders are betting that tariffs will boost inflation and slow economic growth, while the Fed remains cautious about the impact. Despite confidence in the bond market, immediate Fed easing could hinder further Treasury gains as the economy weakens.

Read more at Yahoo Finance: Treasuries Are the Standout Play as Trump’s Trade War Heats Up