The April sell-off for financial markets has been wider and more volatile than typical pullbacks, fueling concern that the aggressive and constantly changing trade policy from Washington, D.C. could be doing long-term damage to the financial standing of the U.S.
The S&P 500 has now dropped 5.4% since President Donald Trump’s April 2 tariff announcement, with day-to-day moves that are drawing uncomfortable comparisons to infamous financial periods like 2008 and 1987. The drop over the past seven trading days comes after the stock market had already had a rocky start to 2025, and other major U.S. asset classes have also started to slide, including the dollar and Treasurys.
“The big takeaway from this year, from the Trump presidency, from everything that’s happened, is that there’s a rotation out of the U.S. And obviously that’s become vicious now — with bond yields staying high and the dollar falling, it’s become the story. But that exodus started well before Liberation Day. … U.S. is the bubble. U.S. All of it,” Marco Papic, BCA Research strategist, said Friday on “Squawk Box.”
The big swings in the stock market are eye-popping on their own, but Wall Street pros are becoming increasingly concerned about the moves in the currency and bond markets. Treasurys and the dollar typically benefit from flight-to-safety environments, a function of the U.S.′ historical financial strength.
But on Friday, falling bond prices pushed the benchmark 10-year Treasury yield briefly above 4.5%, up from 3.99% just a week prior. Meanwhile, the ICE U.S. Dollar Index hit its lowest level in three years. The greenback has seen particularly sharp drops against safe-haven currencies like the Japanese yen and Swiss franc, as well as the euro.
“The market is re-assessing the structural attractiveness of the dollar as the world’s global reserve currency and is undergoing a process of rapid de-dollarization. Nowhere is this more evident than the continued and combined collapse in the currency and US bond market as this week comes to a close,” Deutsche Bank strategist George Saravelos said in a note to clients Friday.
