FICC Focus Tariffs and Volatility Flash Update: All Options Considered
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Apr 14, 2025 The podcast dives into the intriguing world of market volatility spurred by tariff announcements. It explores how these tariffs influence cross-asset markets and shift risk dynamics. Geopolitical tensions are examined as key players in the volatility game. Additionally, the discussion highlights the potential recession and its effects on asset allocation strategies. Intraday trading ranges reveal both risks and opportunities, making for a compelling analysis of the current market landscape.
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Tariff-Induced Volatility
- Trump's tariff announcement significantly increased market volatility across various assets, including swap spreads and volatility itself.
- The S&P 500's intraday volatility even surpassed Bitcoin's during this period.
Treasuries Fail as Diversifiers
- Treasury bonds failed as portfolio diversifiers during the risk-off period.
- The 10-year yield experienced its widest range since the 2008 financial crisis and COVID-19.
Rate Volatility and Inflation
- Tariff news shocked the volatility market, although levels remain below those seen during the 2022-2023 rate hike cycles.
- Increased downside risks to growth and upside risks to inflation complicate the Fed's mandate.