👉 Background: Donald Trump was hyping up Liberation Day as the economic equivalent of the Super Bowl. It was supposed to be a major reset to the global economy. But investors were quite uneasy - the Nasdaq was down ~7% from the beginning of the year until Liberation Day.

‍👉 What happened: Few investors could imagine the tariffs would be as dramatic as they have been. More than 90 countries were whacked with tariffs between 10% (hello Australia) and 145% (hello China). And despite investors begging Trump to reconsider, he tweeted on Truth Social “MY POLICIES WILL NEVER CHANGE” — except a few days later, his policies did in fact change.

‍👉 What else: Trump paused the “reciprocal tariffs” for 90 days and will only be sticking with the 10% baseline tariffs for now (except China). But interestingly, the major reversal was reportedly because of a sell-off in the US bond market.

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‍What's the key learning?

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‍💡Bonds are financial products where individuals, institutions or even countries lend money to a government or company in return for a fixed interest (called a coupon rate).

💡In tough economic times, government bonds are generally seen as a safe haven as opposed to the share market or property market because governments are considered less risk to default. When there’s a lot of demand for bonds, typically, the bond yields will drop. But, during the Tariff tiff, the bond yields were actually rising.

💡This is a pretty big signal that investors not only had little faith in the markets, but also little faith in the US government. So this just shows how powerful financial markets can be as political pressure point - even for Donald Trump.