Weekly Wrap: Extreme Swings - Week Ending April 11

Market Movers

• Turbulent path. Global tariff uncertainty has fueled market volatility, with the VIX spiking to levels unseen since 2020—marked by a 1-week average above 40—reminiscent of COVID-19 and global financial crisis-era instability. Equities experienced a historically sharp drawdown, nearing bear market territory, with significant declines in the Nasdaq and S&P 500 indices, before rebounding after President Trump announced a 90-day tariff pause. Despite the market volatility this week, the Nasdaq is ending the week up +6.7%, and the S&P 500 up +5.2%.

• Waning confidence.  Amid trade war uncertainties the US dollar index decreased 2.8% over the week. The euro rallied +3.3% to 1.13. Safe-haven currencies such as the yen rallied 2% to 143.77 and the Swiss franc moved up +5.5% to 0.8156. Investors selling US equities, the US dollar, and US treasuries have caused the dollar to depreciate and reversed its traditional recessionary "flight to safety" role. One-year risk reversals flipped in favor of the dollar downside for the first time in five years. Gold rose to another record high of $3,239 an ounce, gaining +6.18% over the week.  

• Yield spike. US Treasury 10-year yields neared 4.5% again—a sharp 43- basis points (bps) rise over the week—signaling that they may be losing their safe-haven appeal, especially among foreign investors. Despite this volatility, strong demand persisted, as seen in the results of the $22 billion 30-year auction and the $39 billion 10-year auction this week. 85 basis points in Federal Reserve cuts are priced into the market for this year.  

Macro

• Cooling off. March saw a 0.1% drop in the US Consumer Price Index (CPI), the first decline in nearly five years— driven by lower energy, used vehicles, and travel costs. However, tariff-related price pressures remain a concern. The Federal Reserve is taking a wait-and-see approach to evaluate the impact of tariffs, as analysts predict a delayed reflection in consumer prices. Some companies have warned of potential increases.

• Easing ahead. In March, China experienced its second consecutive month of consumer deflation, with the CPI falling 0.1% year-over-year, alongside worsening factory deflation as the Producer Price Index decreased by 2.5%. Amid escalating trade tensions with the US — where President Trump raised duties on China to 145% and in response, Beijing increased their retaliatory tariff to 125% on US imports. Analysts predict these deflationary economic figures may prompt the People's Bank of China to consider monetary policy easing measures to stimulate the economy and offset external shocks.

• Switch up. The Bank of England temporarily halted quantitative tightening by postponing £600 million in long-dated gilt sales, opting instead to sell £750 million of short-dated debt on April 14, following a surge in the 30-year gilt yield to its highest level since 1998. While the BOE considers this a technical adjustment, analysts speculate it reflects a reduced appetite for bond sales amidst global market turbulence.

Micro

• Semi stockpile. Taiwan Semiconductor Manufacturing Co.’s quarterly revenue rose a larger-than-expected 42%, reflecting strengthening demand for AI servers and smartphones before US tariffs kicked in. Electronics manufacturers had stockpiled goods in US warehouses in anticipation of potential trade and shipping disruptions. A measure of semiconductor stocks is up 4.33% week-to-date. 

• Shipments rush. Personal computer shipments grew at their fastest pace since the pandemic, as companies from Apple Inc. to Dell Technologies Inc. hastened product deliveries around the world before tariffs hit. Laptops led the way, as the entire spectrum of desktops, workstations, and portable computers rose 9.4% to 62.7 million units. Hardware stocks ended the week up 8.34%. 

• Defensive stability. Walmart Inc. reaffirmed net sales growing 3% to 4% this year and plans to keep prices low, which may result in a short-term financial hit. Executives say they haven’t seen consumers hoarding items, but there has been more spending volatility in recent months. They plan to work closely with vendors to maintain low prices. Its e-commerce business is also on track to reach profitability this year. Walmart and other defensive stocks are up 1.77% this week. 

Checklist for the Next Two Weeks

• Major economic events in the US include: Initial Jobless Claims; Industrial Production; Retail Sales; MBA Mortgage Applications; Housing Starts; Philadelphia Fed Business Outlook

• Major economic events around the world include: Japan Industrial Production; Germany ZEW Survey Expectations; Canada CPI; France CPI; UK Jobless Claims