Trump Tariff Announcements Fuel a Bond and Equity Sell-Off

Yields climb on tariff developments. The yield curve bear steepened today after President Trump announced new trade levies against foreign nations. The long-end of the curve rose 3-5 bps, likely a reflection of heightened expectations for tariff-driven price pressures. The 10-year yield closed at 4.38% while 20-year and 30-year yields are near 4.91%. The short-end of the curve rose 1-2 bps, with the 2-year yield now at 3.90%. Meanwhile, equities sold off, with the S&P 500, DJIA, and NASDAQ down 0.79%-0.94%.

Trump announces new tariffs. President Trump revealed today that the US will enact unilateral trade levies against many countries, including Japan and South Korea. Effective August 1, both nations will have a 25% tax on imported goods, while a wide array of other Asian, European, and African nations received tariffs of 25%-40%. Furthermore, President Trump threatened to raise the levies if a country retaliated with their own measures against the US. White House Press Secretary Karoline Leavitt said that President Trump will continue to inform other nations of their respective tariff rates throughout the month until the new August 1 deadline.

“One Big Beautiful Bill” signed into law. President Trump’s tax cut bill is officially signed after the House voted 218-214 in its favor last Thursday. The bill places an emphasis on tax cuts (worth roughly $4.5 trillion over 10 years), including new deductions on tips, overtime and auto loans, and a break for older adults who make less than $75k annually. Proponents argue that the tax cuts will spur long-term economic activity and growth, while critics have pointed to concerns about the estimated $3.4 trillion added to the national debt over a decade (per the CBO). Both could lead to a steeper yield curve, where the latter would be a sign of waning confidence in the US’ ability to tame its rapidly growing debt levels.