Forexlive Americas FX news wrap: Trump drops reciprocal tariffs, huge market moves follow

• Trump pauses reciprocal tariffs for 90 days on all but China
• Trump: China wants to make a deal, they just don’t know how to go about it
• The White House says the 10% baseline tariff rate applies to Canada and Mexico
• The White House isn’t sure what tariff rates are on Canada and Mexico now
• FOMC minutes reveal growing inflation concerns and cautious stance
• US treasury auctions off $39 million of 10 year notes at a high yield of 4.435%
• Fed’s Musalem sees growth this year materially below 2% trend
• Fed’s Barkin: Tariff price hikes could begin by June
• More from Fed’s Barkin. Watching consumers most closely as are biggest part of economy
• Alphabet CEO Pichai: We plan to invest around $75 billion in total In 2025
• Atlanta Fed GDPNow growth estimate for Q2 -2.4% versus -2.8%. Gold adjusted -0.3%
• South African rand falls to all-time low
• EIA weekly crude oil inventories +2553K vs +1421K expected
• US February wholesale sales +2.4% vs -1.3% prior
• Trump says to “be cool” as everything is going to work out well
• German coalition outlines policy agreements
• Fed’s Kashkari: The bar is higher for cutting rates due to tariffs
• Bessent: Tariff levels are a ceiling if other countries don’t retaliate
• Jamie Dimon: Stickly inflation will not go away quickly
• Fed’s Daly: We have time and space to deliberate next moves

Markets:

• S&P 500 up 9%, Nasdaq up 11.5% – SPX gain is the most since 2008
• Gold up $114 to $3098 — largest one-day gain in five years
• WTI crude oil up $3.22 to $62.80
• US 10-year yields up 10 bps to 4.35%
• AUD leads, CHF lags

What a day.

Coming into the day, there were some intense fears about the bond market after yields jumped in Asia in a move that was pointing to heavy financial stress and disorderly unwinds in trades. US 30-year yields briefly rose above 5% from 4.32% at the start of the week in a move that started to look like the one that led to the downfall of Liz Truss.

With that, stock futures were beaten up again and there were real fears of a crash.

That sentiment appeared to get Trump’s attention. His comments later in the day suggest he saw the bond market and comments from Jamie Dimon about a recession. He said people were scared and ‘yippie’ so he decided to pause tariffs for 90-days, save for a 10% baseline. China wasn’t so lucky as their rate was upped to 125% but even with that he later said there would be negotiations with China, highlighting that this could also be temporary.

Trump himself hinted at an easing earlier in the day saying to ‘be cool’ and that stock markets would rise. He made the announcement about the tariffs on Truth Social and that set off a huge reversal in markets and enormous stock market gains. USD/JPY rose 300 pips in a near-straight line and AUD/USD rose 150 pips.

Aside from versus the yen and Swiss franc, the US dollar sold off as global growth concerns abated.

All that said, this is just one chapter and 10% tariffs on the world and 125% on China is certainly worse than what was expected a few weeks ago. Big questions remain on whether the 10% level is now the floor and on how the US intends to complete negotiations with +70 countries within 90 days. There are plenty of indications that they’re making it all up as they go along; and that we’re all along for the ride.

For now though, the bulls get to score a major victory.

This article was written by Adam Button at www.forexlive.com.