April brought extreme volatility across global financial markets, with sharp swings in stocks, bonds, currencies, and commodities. Much of the turmoil was sparked by President Trump’s unexpected implementation of “Liberation Day” tariffs, which marked a sharp departure from the initially discussed reciprocal and parity-based proposals.
The S&P 500 plunged more than 11 percent over a three-day span, only to rebound 9.5 percent in a single day following news of a 90-day pause on the tariffs—excluding China. For the month, the index ended down 0.76 percent.
Bond markets also experienced significant disruption. The yield on the 10-year U.S. Treasury surged from 4.01 percent on April 4 to 4.59 percent just five days later, reportedly driven by aggressive selling from Japan. By month-end, yields had eased to 4.17 percent.
Commodities were not immune. West Texas Intermediate crude oil fell 18 percent, closing near $59 per barrel. Gold briefly hit an all-time high of $3,500 per ounce before settling at approximately $3,318.
The volatility was set in motion on April 2, when President Trump issued an Executive Order declaring a national emergency. The order cited “a lack of reciprocity in our bilateral trade relationships, disparate tariff rates, and non-tariff barriers.” One example: the U.S. imposes a 2.5 percent tariff on imported gasoline-powered passenger vehicles, while the European Union levies a 10 percent tariff.
While the idea of reciprocal tariffs resonated with many, the administration’s initial actions went well beyond parity. The tariff hikes also targeted non-tariff barriers—such as currency manipulation, regulatory hurdles, government subsidies, and persistent trade deficits—taking markets by surprise.
Historically, sharp sell-offs are often followed by equally strong rebounds. The real question now is: where do we go from here?