April Shockwaves: Why U.S. Havens Became Hazards (Free Preview)
Art of the Deal 2; Electric Boogaloo
Hello everyone,
Wishing you all a Happy Easter. I hope you're enjoying the long weekend and finding time to unplug and recharge after a crazy week in the markets.
This report offers a concise summary of recent market developments and evaluates their anticipated impact on the U.S. economy and, by extension, the global economy.
But first, Recapping select trades of the past week:
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What you’ll learn if you keep reading
Why yields and the dollar both plunged despite convention saying they shouldn’t, and what that means for your carry trades
The single chart that flags when risk‑parity funds hit the exit door
Our key inflection points for ES, NQ and GC this week—and how to set your orders around them
Overnight algo levels so you can start deploying systematic entries as early as 6 pm EDT
The 'Liberation Day' Tremor Shakes Global Markets
The first week of April delivered an extraordinary tableau on trading floors worldwide. Within a mere 48 hours of President Donald Trump’s April 2, 2025 “Liberation Day” announcement of sweeping import tariffs, global markets experienced a convulsive reaction rarely witnessed outside of emerging market panics. The S&P 500 index, a broad barometer of U.S. corporate health, slid almost 5 percent, reflecting a sharp downturn in investor confidence.1 Simultaneously, the yield on the benchmark 10 year U.S. Treasury note, a cornerstone of global finance, vaulted from 4.10 percent to 4.52 percent, a dramatic rise indicating aggressive selling of what is typically considered a safe haven asset.3 Compounding the shock, the ICE U.S. Dollar Index (DXY), which measures the greenback against a basket of major currencies, cracked the psychologically important 100 level, tumbling significantly despite the rise in U.S. interest rates.5
This three-pronged sell off, hitting U.S. equities, U.S. government bonds, and the U.S. dollar concurrently, left senior strategists struggling to recall historical parallels, underscoring the severity and unusual nature of the market tremor. The immediate trigger was the administration's rollout of broad tariffs, including a punitive 125 percent levy aimed specifically at Chinese goods, introduced under the banner of "Liberation Day."
When Havens Become Hazards: The Risk Off Paradigm Shatters
The market's reaction was not just severe; it was anomalous, defying decades of established investor behaviour during periods of stress. Historically, geopolitical shocks or signs of economic turmoil trigger a "risk off" flight to quality. In such scenarios, tumbling share prices typically coincide with a rush into the perceived safety of U.S. Treasury debt, pushing yields down, and a strengthening of the U.S. dollar as global capital seeks refuge.
This time, however, both Treasuries and the dollar were offered aggressively alongside equities. This synchronous decline across asset classes suggested something far more profound than a mere rotation within U.S. markets. Investors appeared not just to be shifting from stocks to bonds, but actively cutting their aggregate exposure to the United States itself.
Further evidence for this interpretation came from high frequency trading data. A study by the Centre for Economic Policy Research (CEPR), referenced in market commentary following the event, reportedly found that foreign equity funds were significant net sellers of U.S. stocks during the period, subsequently repatriating the proceeds out of the dollar. While specific CEPR research snippets focus more broadly on declining foreign official demand for Treasuries and de risking 7, the reported finding on equity outflows aligns with the observed market dynamics. This outflow was substantial enough to weigh heavily on the dollar, even as nominal U.S. yields surged, a direct contradiction of conventional currency models where higher yields are expected to attract capital and support the currency.9
The sheer velocity and synchronicity of the sell off across these three distinct asset classes hinted at a rapid, almost instantaneous reassessment of U.S. asset risk. The fact that the moves unfolded intensely within 48 hours suggests mechanisms beyond gradual portfolio adjustments were at play. This points towards either systematic, rules based selling triggered by the sudden spike in volatility, or a widespread, sudden loss of confidence that overwhelmed typical market correlations.
Perhaps most significantly, the intense selling pressure on U.S. Treasuries challenged their fundamental role as the global "risk free" asset. The sharp rise in yields during a moment of acute market stress indicated that the source of the turmoil, U.S. policy and its potential fiscal consequences, was perceived as directly threatening the value and stability of U.S. government debt itself. In this instance, the traditional safe haven seemingly transformed into a source of risk.
Anatomy of the April Storm: Unpacking the Turmoil
The market turbulence stemmed from a confluence of technical market dynamics, discretionary investor decisions, and deep seated concerns about U.S. policy and fiscal health.
Volatility's Vise and the Algo Effect
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