The Bond Market Breaks Trump, Remains Undefeated…

By Michael J. Kramer of Mott Capital Management

Founder/CEO at Mott Capital Management, LLC • Apr 9, 2025 at 5:48 PM EDT

The signs of something breaking were intense yesterday and even more intense this morning.

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It took a few days and a near-bond market meltdown to break Trump, but he finally broke. As I noted yesterday, it was starting to look ugly out there, and last night’s bond market rollercoaster rise was unsettling.The market continues to defend its title as heavyweight champ.

The signs of something breaking were intense yesterday and even more intense this morning. That all eased after the announcement that Trump would pause the tariffs for 90 days, except for China. If anyone remembers the 2018 and 2019 periods, it was a chronic ride of ups and downs, with the market living by tweet. It was an impossible period, and this seems like it can be nothing but worse than that.

I do not know how China will respond to Team Trump’s latest upping of the tariffs, but I’m guessing they will. The easiest way for them to respond is to continue to weaken the USDCNY. But I do not think they are going to be very happy about this at all.

As for stocks, it was a reflexive move due to that implied volatility reset we have come to love. With the VIX trading around 50, the news immediately relieved that pressure point, with the VIX dropping to around 32. It is unclear where the VIX will settle, but given that the President is willing to let the bond market go to the edge, I would think that the VIX should have a higher floor than it did before the Tariff tantrum.

As for everything else, we’ll see what happens.

More By This Author:

The Market Is Starting To Look Really Ugly
A Mechanical Implied Volatility Reset
Rates Soar Ahead Of Three Big Treasury Auctions

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