You can intimidate everybody

Daily Updates:

• Bill Clinton’s political advisor James Carville once said if he was reincarnated he “would like to come back as the bond market. You can intimidate everybody”. 
• As President Trump’s tariff policies and the trade war that is emerging as a result continue to grip financial markets, bond markets made significant moves yesterday – 
• moves that go against some of the stated goals of the Trump administration. 
• Treasuries sold off on Monday, with yields across several maturities rallying more than 10bps (see below). The 10Y yield rose 14bps from open to close, and intra-day, the benchmark yield traded within a range of 3.87% and 4.22%. 
• That single-day move means that the 10Y yield is now back at its Liberation Day levels, while equities trade 10% lower. 

• It was not just UST’s that were shook by volatile moves however – the S&P 500 and Nasdaq-100 experienced aggressive swings too. SPX opened -3% on Monday, following on from Friday’s selloff. That selloff was then partially reversed on the day when various news sources reported that the President was considering a 90-day pause in his tariffs. Subsequently, the S&P 500 rallied close to 400 points. That would prove very short-lived. Minutes later, the White House denounced the report as “fake news”. 
• Ultimately, the S&P 500 ended the day slightly lower at -0.2% whilst the NDX closed up 0.2%. 

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• Crypto markets have so far bounced back slightly today, with BTC currently trading closer to $80K than its low of $75K. 
• Other major altcoins have also rebounded somewhat overnight: Ethereum (5.6%), Solana (+7.5%), Dogecoin (+10.3%), Hedara (+15.2%) and Sui (+11.2%) over the last 24 hours. 
• In derivative markets, both BTC and ETH volatility smile skews are still indicative of put demand, though the left wings of the smiles at short-tenors have dropped since yesterday. That hasn’t quite yet been met by an increased demand for call options however. 
• The most recent inversion of the term structure of at-the-money implied volatility has relented – although this is a story that has played out more than a few times over the last three months.

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• Further clouding the macro outlook is a question of “who blinks first” between President Trump and President Xi. China’s Commerce Ministry has promised that China “will fight to the end” over its tariff war with the US. That war developed further yesterday as Trump promised to add another 50% tariffs on China which would bring total tariffs to 20 + 34 + 50 = 104% “if China does not withdraw its 34% increase … by tomorrow, April 8th, 2025”.

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• Today China set its daily yuan reference rate slightly above the 7.20 per dollar level – a level that has implicitly been seen as a broader indication of the yuan’s weakening or strengthening against the US dollar. 
• The PBOC set the fixing at 7.2038 per dollar, the weakest since September 2023.

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• World Liberty Financial has proposed distributing a small amount of its new stablecoin, USD1, to all current WLFI token holders via a live test of its onchain airdrop system. Awaiting governance approval, the purpose is to validate the system’s functionality, increase awareness of USD1, and reward early community supporters.

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• The first XRP-based ETF in the U.S. market is set to start trading today on NYSE Arca and offers leveraged 2x daily exposure to XRP. Offered by Teucrium Investment Advisors LLC, the Teucrium 2x Long Daily XRP ETF (XXRP) has a 1.85% management fee.
• Former Binance CEO Changpeng 'CZ' Zhao has joined the newly formed Pakistan Crypto Council as a strategic advisor. His role supports Pakistan’s push to advance crypto infrastructure, education, and adoption through government-backed initiatives.

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