Highlights

• Trump’s renewed attacks on Fed Chair Powell and threats to fire him have triggered sharp market declines; Dow dropped 971 points, S&P 500 fell 3.3% Monday and another 2.4% Tuesday, Nasdaq down 3.6%.
• Gold surged to a record $3,500/oz (+50% YoY) as investors seek safe havens amid political and economic uncertainty; Swiss franc, yen, and euro also hit multi-year highs.
• Bitcoin rallied 3.8% to $90,000, decoupling from tech stocks and benefiting from ETF inflows and optimism around new pro-crypto SEC Chair Paul Atkins.
• IMF slashed 2025 global growth forecast to 2.8% (from 3.3%), citing century-high US tariffs and escalating trade war; US 2025 GDP cut to 1.8%.
• China imposed new export controls on seven rare earths, threatening US defense and semiconductor supply chains; US sources 70% of rare earths from China.
• US finalized tariffs up to 3,500% on solar imports from Cambodia, Malaysia, Thailand, and Vietnam, likely raising costs for US solar developers and tightening supply.
• Stocks rebounded 3% intraday Tuesday after JPMorgan’s Scott Bessent suggested a US-China trade deal is possible, though no talks have begun.
• US Treasury’s $69B two-year note auction showed weaker demand (3.795% yield, first tail since January), with lower indirect bidder participation.
• Tesla fell nearly 6% after delaying its low-cost Model Y; Q1 results due after close, with focus on Model Y timeline and margin outlook.
• Northrop Grumman plunged 15% after a $477M B-21 bomber loss and earnings miss; guidance cut sharply.
• Novo Nordisk dropped 9.8% as Eli Lilly’s oral diabetes drug outperformed in trials, sending Lilly up 14.3%.
• Investor sentiment has soured: 49% of $386B AUM expect a hard landing, record underweight in US stocks, but retail ETF inflows remain strong, especially into leveraged Nasdaq 100 products.

Market Commentary

Markets remain highly volatile as political risk and macro uncertainty dominate sentiment. President Trump’s escalating attacks on Fed Chair Powell and open discussion of firing him have shaken investor confidence in central bank independence, sending equities and the US dollar sharply lower. The legal ambiguity around Powell’s removal adds to the uncertainty, and the threat of further executive interference in monetary policy is driving a flight to safety.

Safe-haven flows are pronounced: gold has soared to an all-time high above $3,500/oz, and traditional refuge currencies (yen, Swiss franc, euro) are at multi-year peaks. Bitcoin’s surge above $90,000, buoyed by ETF inflows and optimism over new SEC Chair Paul Atkins’ pro-crypto stance, signals a growing decoupling from risk assets and a search for alternatives to fiat and equities. The CFTC’s review of 24/7 crypto futures trading could further legitimize digital assets.

Macro headwinds are intensifying. The IMF’s sharp downgrade of global and US growth, citing trade war escalation and record tariffs, underscores the risk of a synchronized global slowdown. China’s rare earth export controls and the US’s punitive solar tariffs signal deepening supply chain and cost pressures for US industry, especially in tech, defense, and renewables. These developments raise the risk of stagflation and further margin compression for corporates.

Despite Tuesday’s intraday equity rebound on hopes of a possible US-China trade deal, volatility remains elevated (VIX ~30), and institutional sentiment is deeply bearish. Outflows from US stocks by large investors are at record levels, though retail flows into leveraged ETFs—especially the Nasdaq 100—remain robust, creating a divergence that could fuel further volatility if retail sentiment turns.

Fixed income markets are showing signs of stress, with weaker demand at the latest two-year Treasury auction and yields ticking higher. Watch for further signs of strain in upcoming auctions and any Fed response to political pressure. Into the close, traders should monitor Tesla’s earnings for sector sentiment, potential follow-through in gold and crypto, and any new headlines on Fed leadership or US-China negotiations. Stay nimble—headline risk and liquidity shocks remain elevated across asset classes.