President Trump’s Tariff Announcements Fuel Volatile Session

Yields decline following tariff unveiling. Rates markets were relatively quiet today leading into President Trump’s tariff announcements at 4 PM EST. At the start of Trump’s press conference, yields climbed 5 bps after the President reaffirmed 25% auto tariffs but did not expand on previously unannounced measures. However, yields plummeted ~12 bps from session highs when Trump provided details on new reciprocal tariffs. Ultimately, yields closed 1-4 bps lower across the curve, as the levies were generally interpreted as stronger than expected. 2-year and 10-year yields are currently 3.86% and 4.13%, respectively.

President Trump proceeds with sweeping global tariffs. President Trump announced a minimum tariff of 10% on all nations and additional, reciprocal tariffs on nations where the U.S. has more pronounced trade imbalances. The 10% tariffs will begin early Sunday morning, while country-specific tariffs above the 10% baseline will commence next Wednesday. The President emphasized that after factoring in currency manipulation and trade barriers, the new reciprocal tariffs are comparatively lenient. He said, “This is not full reciprocal. This is kind reciprocal.” Today’s announcement was more severe than expected, though the President left the door open for negotiation, indicating he may reduce or remove tariffs if trading partners remove theirs. He said, “I say terminate your own tariffs, drop your barriers, don’t manipulate your currencies…” Today’s developments mark a shift towards the most restrictive U.S. trade policy stance in over 100 years, with analysts at Evercore estimating the average U.S. tariff rate is headed to ~30%. While there is much disagreement over the long-term impact of the tariffs, the President estimates they could generate government revenues of $600 billion to $1 trillion over the next year.

Private US hiring stronger than expected ahead of Friday’s broader slate. This morning’s ADP employment data showed that private US businesses added 155k jobs in March, well above the 120k forecast and February’s (revised) 84k. Chief Economist of ADP Nela Richardson said, “Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors.” The data comes ahead of Friday’s nonfarm payrolls and unemployment rate figures, which are expected to show a generally robust labor market. The US is expected to have added 140k jobs in March while the unemployment rate is expected to remain flat at 4.1%.