Why it might get worse for US stocks

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One of the many significant things in the US stock markets is that US government bonds do not actually collect slowly. This is not a good sign.

Treasures typically yin to shares yang. When shares hit the bonds mostly jumps, because investors are safer palms. They are ultimately known as “risk free”. This is a mechanism that has multiple diverse portfolio for decades, only with rare exceptions.

This month’s rapid stock market shock, however, is not so processed. In this month, US shares are monster, go down 5 percent, and we are just half in March. We get down to 8 percent from mid-February. At the same time, this year’s bond prices have gathered, but not sharply. Crusally, Benchmark 10-year US government bonds are now at about the same level as before, at the end of last month.

This tells you that this is a sensual shock. It’s not the economy, stupidity. It’s harder to fix it. The data on the US economy is shaken, but not terrible, of course not so ugly as the shocks of the markets. US inflation slipped to 2.8 percent In February, a sign that the economy weakens a little bit but not tank.

But it’s not really what puts investors. “We sell our assets when we talk,” Michael Strobeyek, the Chief Investment Officer of the Swiss private bank’s Lombard Operi, told me in Friday morning. “We’re going to the pain of the pain now.” This is a pretty switch. This time Strobaek was talking about this time last yearGeostrack:“The imperative of buying and keeping US stocks. This year, he still corresponded to the exclusive American rule.

Is US Economy has not changed his opinion. Instead, it was that he called Europe’s “final provocative” of his vice president JD Vance in February. Then Donald Trump’s “Ukrainian President Volodimir Zelensky” was later treatment in the White House later. Then it was the threat of US tariffs against Mexico and Canada. “It is absolutely clear that they hit this agenda with a sledge,” Strobad said. Now he is retreating instead of shares and instead of bonds and cash.

At some point, the permanent tract of Trump administration tariff policy will damage the real economy. Wealthy Americans are highly exposed to rapidly sliding reserves now, so this will hit them in your pocket. Companies will return to costs if they are photographed by a random and painful policy shift. Even for more worrying investors, uncertainty makes it very difficult to make earnings forecasts, leaving the fund managers Flying blindA number

Mood is awful. Multi-level multi-level, multi-cultural management of the British assets, mentioned that by running in his emotional drawing in 1991. This period is twisted in the days of (or down, presumably) as a failure of Lehman’s brothers, the euro crisis, and in 1998.

Again, Greetham indicates that this is the economy that prevents it here. It is tariffs, geopolitics, uncertainty itself. And “Central banks are not there for that.” In other words, the Federal Reserve is not going to swim to salvation, such as it did, for example, the crisis 6 years ago.

If investors believe that Fed will leave a white horse to cut the prices and correct the confusion, the bonds will be significantly stronger than today. Instead, investors are looking forward to slow growth, the future of the future of the future of the future, which can not be easily corrected by monetary policy.

It doesn’t leave a short-term catalyst to turn this situation around. The intervention of the individual’s transplantation for the US President, an adult intervention in the room, or the sudden accident of the real economy, which causes mass feeds, is nothing to stop. “We are in the area of ​​the knife,” says Greenetam.

Secretary of the Treasury Scott Best fired the impact of “slight instability” of shares. The White House message is a short-term pain for the long-term gain. This week from Goldman Sachs and Blackstone to Wall Street Overload this week highly assessed potential ups Trump about favorite tariffs. I will have everything they have.

Even if the administration wants to suppress Fed, the investors will consider as an unprepared intervention in the independence of the Central Bank, which would probably be worse.

Everything has a price, and the temporary jumps in wide decline are for courses. At some point, US stocks can become cheap enough in transaction hunters. But it is difficult to claim that we are still there in Europe, compared to 17 times in Europe. Foundation leaders remain optimism. Maybe US investors don’t notice the proposed Trump 200% Tariffs: After all, on the proper French champagne.

katie.martin@ft.com