Markets edge higher as latest Trump tariff plan takes shape

Dow jumped 342, advancers over decliners 3-1 & NAZ went up 295.  The MLP index soared 5+ to the 219s & the REIT index rose 4+ to the 409s.  Junk bond funds were mixed & Treasuries had heavy buying which sharply reduced rates.  Oil remained steady in the low 71s & gold surged 28 to 2957 (more on both below).

Dow Jones Industrials

Pres Trump announced that the US is implementing "reciprocal" tariffs against countries that tax or limit markets for American goods.  "On trade I have decided for purposes of fairness, that I will charge a reciprocal tariff – meaning whatever countries charge the United States of America, we will charge them no more, no less. In other words, they charge us a tax or tariff and we charge them the exact same tax or tariff. Very simple," Trump said.  "In almost all cases they are charging us vastly more than we charge them, but those days are over," Trump added.  A source familiar with the plans said that Trump will sign a presidential memorandum ordering the US Trade Representative to investigate & counter non-reciprocal trade across all trading partners.  The representative will identify trade agreements where there are significant trade deficits that are unfair to the US.  Mentioned in the memo, according to the source, is that Brazil taxes US ethanol at 18% while the US taxes ethanol imported from Brazil at just 2.5%. 

Trump signs 'reciprocal' tariff plan for countries that tax US goods

Collectively, Americans now owe a record $1.2T on their credit cards, according to a new quarterly report on household debt from the Federal Reserve Bank of New York.  Credit card balances jumped by $45B in the 4th qtr of 2024, driven in part by holiday spending, & are now 7.3% higher than a year ago.  At the same time, credit card delinquency rates “remained elevated,” the New York Fed researchers found — with 7.18% of balances transitioning to delinquency over the last year.  That uptick could indicate “borrowers are having some difficulty repaying,” the researchers said.  “No one should be surprised that credit card debt hit another record high,” said Matt Schulz, chief credit analyst at LendingTree.  “Stubborn inflation has shrunk a lot of Americans’ financial margin for error from slim to about none, forcing people to lean more heavily on credit card debt,” Schulz added.  Credit card debt has remained stable over the last 2 decades.  However, in the years since the pandemic, households largely spent down their excess savings, which sparked a rebound in credit card balances.  Consumer spending continues to remain strong, despite high borrowing costs.  “There’s very little reason to believe that we won’t continue to see new credit card debt records being set going forward,” Schulz said.  Meanwhile, credit cards have become one of the most expensive ways to borrow money.  Lower-income households that had to stretch to cover price increases, have been hit especially hard after the Federal Reserve’s string of interest rate hikes lifted the average credit card rate to more than 20% — near an all-time high.

Credit card debt hits record $1.21 trillion, New York Fed research shows

30-year mortgage rates inched slightly lower this week during a volatile period for bond markets but remained close to 6.9%.  The average 30-year mortgage rate fell 2 basis points to 6.87% this week, from 6.89% a week earlier, according to Freddie Mac data.  The average 15-year mortgage rate rose slightly to 6.09%, from 6.05%.  The 6.87% level is the lowest seen so far in 2025, but mortgage rates have been stuck in an extremely narrow band after hitting a YTD high of 7.04% in mid-Jan.  Housing market experts expect that mortgage rates may stay stuck around these levels as financial markets whipsaw in reaction to fast-changing presidential administration priorities & fresh economic data.  Yesterday, Consumer Price Index data showed inflation heated up in Jan & is running well above the Federal Reserve's 2% goal, dampening hopes of lower interest rates.  10-year Treasury yields, which mortgage rates closely track, initially jumped, & traders pushed back assumptions about the Federal Reserve's interest rate-cutting timeline.  At year-end, they were calling for 2 cuts in 2025, but they now see a single cut this year, & not until Dec.  But a day later, yields dropped just as sharply after Pres Trump pledged reciprocal tariffs on US imports but said they wouldn't go into effect immediately.  Though mortgage rates aren't controlled by the Fed, they typically move based on expectations about the direction of benchmark interest rates.

Mortgage rates creep to lowest point of 2025 amid volatile bond swings

Gold's price is rallying after traders bought yesterday's dip & are driving prices back up to $2920 today, while bullion traders shrugging off the US Consumer Price Index (CPI) data for Jan released yesterday.  Traders are also ignoring the possibility of a peace deal formation with Pres Trump & Russian Pres Vladimir Putin, who have spoken on the phone to outline a meeting soon to work out the broad strokes of a peace deal.  Despite these quite substantial tail risks, gold is rallying again, revealing a firm commitment from traders to keep residing in the safe haven asset.  Meanwhile, traders are digesting Federal Reserve Chair Jerome Powell's 2 testimonies at Capitol Hill before lawmakers.  The release of Jan's Consumer Price Index (CPI) numbers yesterday proved that the Fed has the right angle to keep rates steady for longer.  US yields surged during the past 2 days, though with the pickup in gold buying, the question will be whether US yields can keep rising in tandem with an uptick in gold, which is contradictory.

Gold roars and soars back above $2,900 as markets disregards hot CPI print

WTI crude oil futures fell by around 1% to $70.50 per barrel today, nearing a 7-week low, driven by optimism that peace talks between Russia & Ukraine, encouraged by Pres Trump, could lead to the easing of sanctions on Russian oil exports.  Trump confirmed that talks would begin immediately & hinted at a possible meeting with Putin in Saudi Arabia, fueling speculation that the disruption to Moscow's oil supply could end.  Meanwhile, concerns over Trump's threat of imposing new reciprocal tariffs on US trade partners added to market anxiety, potentially reducing economic growth & oil demand.  Also, the latest EIA data showed a larger-than-expected rise in US crude inventories, up by 4.1M barrels.  On the positive side, the IEA lowered its global oil surplus projections, highlighting strong demand in Asia & sanctions on OPEC+ nations.

Oil Falls Toward 7-Week Low

Stocks moved higher after Pres Trump said he plans to introduce reciprocal tariffs as soon as Apr, while investors digested another report that suggested inflation is once again heating up.  Markets took a fresh tariff announcement from Trump in stride.  In a PM briefing, Trump called for "fair and reciprocal" tariffs on all US trading partners & signed a measure that could lead to the implementation of those duties as early as Apr.  "I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them," Trump said.