{"id":20252,"date":"2025-04-08T08:25:05","date_gmt":"2025-04-08T08:25:05","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=20252"},"modified":"2025-04-08T08:25:05","modified_gmt":"2025-04-08T08:25:05","slug":"navigating-trumps-tariffs-storm-what-traders-need-to-know","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-latam\/featured\/navigating-trumps-tariffs-storm-what-traders-need-to-know\/","title":{"rendered":"How to Trade During Trump’s Tariff Storm"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

It\u2019s been exactly 78 days since Donald Trump began his second presidency. Even before the dust from his controversial inauguration settled, global markets were thrust into a full-blown trade war, with the US\u2014firing unprecedented tariffs like bullets\u2014right at the eye of the storm.<\/p>\n\n\n\n

From massive dips across assets to the unexpected alliance between economic giants Japan, China, and South Korea, traders are feeling the pressure of Washington’s decisions. The volatility is unparalleled, and understanding how to navigate this storm is more critical than ever.<\/strong><\/p>\n\n\n\n

Will there be a recession? What does this mean for US stocks and bonds? Can Bitcoin recover to its peak of $100k? <\/strong>

In this article, we\u2019ll dive into the practical implications of Trump\u2019s tariffs on trading decisions and tackle these pressing questions. Here\u2019s your Trump Tariff Survival Guide\u2014packed with insights and opportunities to help you navigate the ongoing market uncertainty.<\/strong><\/p>\n\n\n\n

Is It a Good Time to Short U.S. Stocks and Bonds?<\/h2>\n\n\n\n

U.S. Stocks: Market Conditions and Risks<\/strong><\/h3>\n\n\n\n

As of April 2025, U.S. stocks have faced a sharp downturn. The S&P 500 is down 21.3%<\/strong>, and the Nasdaq Composite is off 25.6%<\/strong>, which qualifies as a bear market<\/strong>. While this type of decline historically signals a recession, exceptions have occurred, such as in 1962, 1987, and 2022. However, with the VIX (volatility index) surging<\/strong> to levels unseen since the 2008 crash, we see heightened fear and forced liquidation<\/strong>\u2014yet no clear catalyst for a market bottom.<\/p>\n\n\n\n

The VIX surged to 60.13 on April 7, closing at 46.93 on April 8, hitting one of its highest levels since the 2008 and 2020 crashes. This spike suggests capitulation-like fear, often seen near market bottoms. Historically, VIX spikes above 50 have preceded strong short-term rebounds \u2014 but not always durable ones. In both 2008 and 2020, markets continued falling even after the VIX peaked.<\/p>\n\n\n

\n
\"SpongeBob
GIF: The VIX is also dubbed by Wall Street as the ‘fear gauge’. With it closing at historic highs, it is a scary time indeed.<\/em><\/figcaption><\/figure><\/div>\n\n\n

Should Traders Short Stocks Now?<\/strong><\/h3>\n\n\n\n

Shorting U.S. stocks might still present downside potential, particularly if recession risks materialise.<\/strong> If economic data worsens or corporate earnings take a hit, further declines could occur. But, with much of the bad news priced in, watching for signs of economic stabilisation or policy changes may signal it\u2019s time to cover short positions. Therefore, timing is crucial<\/strong>, as the current market has already priced in a lot of the negativity.<\/p>\n\n\n\n

U.S. Bonds: A Changing Narrative<\/strong><\/h3>\n\n\n\n

The narrative around U.S. Treasury bonds has shifted as the 10-year yield has fallen to around 4.0%, its lowest point since October 2024. This drop is attributed to a flight to safety amidst escalating trade tensions and recession fears. The yield curve remains inverted<\/strong>, with short-term yields higher than long-term ones, which is a classic recession indicator.<\/strong><\/p>\n\n\n\n

Should Traders Short Bonds?<\/strong><\/h3>\n\n\n\n

Shorting bonds has become a less attractive strategy<\/strong>. As recession concerns rise, bond prices are rising, and yields are likely to fall even further. The environment for bond markets has shifted toward long positions, especially with inflation expectations remaining modest and the possibility of further Fed rate cuts. Shorting bonds carries significant risk, and unless inflation surprises to the upside, a more cautious approach to bonds seems prudent.<\/strong><\/p>\n\n\n\n

Will There Be a Recession?<\/h2>\n\n\n\n

The risk of a recession in the U.S. is growing, with several key indicators pointing to a potential slowdown.<\/p>\n\n\n\n

Key Recession Indicators:<\/strong><\/h3>\n\n\n\n