Trump Can’t Beat the Bond Market and Faces a Formidable Foe in China

While President Donald Trump is fighting battles on several fronts, his most formidable adversaries have emerged as China and the bond market. He has just suffered a setback from one, and the other is a must-win, Callum Keown reported for Barron’s Daily.

The bond market may have made Trump blink—but if he can make China do the same, the rebound could accelerate.

Relief swept through Wall Street after Trump announced a 90-day pause for countries slated to face levies above 10%.

Although U.S. Treasuries and the recent sharp selloff weren’t explicitly cited as reasons, Trump admitted, “The bond market is very tricky. I was watching it.” He also commented that people were “getting yippy.”

The pause triggered a historic rally in U.S. stocks: the S&P 500 posted its best day since October 2008, jumping 9.5% on Wednesday, while the Nasdaq Composite surged 12.2%—its best performance since January 2001.

The optimism spread globally as other markets picked up where Wall Street left off.

However, uncertainty remains. The downside risks are still lurking, and Trump’s sudden reversal offers little clarity on trade policy. Taxes on pharmaceutical products are expected to be next.

Despite the rally, the S&P 500 closed about 4% below its level at one point last week before reciprocal levies were unveiled last week. Whether it can regain those losses now depends on another tough opponent: China.

Simultaneously with the 90-day delay, Trump raised tariffs on Chinese goods to 125%, responding to Beijing’s 84% retaliatory tariffs.

The ball is now in China’s court, and any indication it might yield could provide fresh momentum for the market’s recovery. The bond market may have made Trump blink—but if he can make China do the same, the rebound could accelerate.