Latest Tariff Threats and Market Reactions

The latest in a series of tightened tariff threats by President Trump isn’t having the anticipated impact on risk markets at least halfway through the U.S. trading day on Thursday.

The stock market initially bounced off a sharply lower opening, and Bitcoin (BTC) rose above $91,000 as Commerce Secretary Howard Lutnick, during a CNBC appearance, stated that the president would exempt Mexico from his new 25% tariff on goods or services covered under a previous trade agreement. This kinder approach towards the neighboring country was later confirmed by President Trump’s social media post.

However, the positive market movements were short-lived, with the Nasdaq hitting its session low just past noon on the East Coast, down 2.3%. Bitcoin retreated to $88,500, reflecting a nearly 1% decline over the past 24 hours.

Global Interest Rates Surge

Amid the continuous news flow from Washington D.C., a sharp rise in interest rates globally has emerged.

With U.S. military support for Europe potentially diminishing, governments across the continent are committing to substantial increases in defense spending. For example, Germany experienced one of its worst bond crashes ever this week, with the 10-year Bund yield surging over 40 basis points to 2.83%.

In Japan, where long-term Japanese Government Bond (JGB) yields were nearly negligible for decades, the 10-year JGB yield rose another 6 basis points to 1.51% overnight, more than double the level from six months ago.

These trends have not gone unnoticed in U.S. markets. The 10-year Treasury yield, which previously declined about 70 basis points since Trump’s inauguration, has surged over 20 basis points in the last 48 hours to 4.30%.

Upcoming U.S. Jobs Figures

The significant rise in interest rates adds renewed significance to the February U.S. Nonfarm Payrolls Report scheduled for release Friday morning.

Economists anticipate a payroll increase of 160,000 compared to 143,000 in January, with the unemployment rate expected to remain steady at 4%. A strong report — employment figures have often exceeded expectations in recent months — could lead to even higher rates and push risk markets, including cryptocurrencies, into a deeper decline.