4/14/2025

Good Morning.

Trump announced a 90-day pause on the administration's reciprocal tariffs. The 10% flat tariff on all imports is still in place. The temporary pause ends in early July. This means markets will continue to anxiously await policy decisions and likely remain volatile.

The administration's back course is a concession to the plunging markets and a concerning U.S. bond sell-off. Trump stated, “I thought that people were jumping a little bit out of line,” referring to market conditions following the tariffs.

Chinese Tariffs, The U.S. has placed 145% tariffs on all Chinese goods in reaction to China's “retaliation” as it announced 125% tariffs on U.S. goods. However, the Whitehouse later stated it would not impose this rate on technology products like iPhones, PCs, and chips. These tariffs are expected to bring most trade between the two largest economies to a complete halt. Tariffs would have crushed U.S. tech companies that rely on Chinese manufacturers, whose imports are not exempt will need to rapidly adapt.

In today’s newsletter we will cover: 

• Markets

  • A Week Defined by Historic Swings

  • Yields Soar Amid Market Turbulence

  • High Anxiety, Fast Fade

  • Gold Hits Record High

  • Solid Start to Earnings Season

• Economic Crossfire: The U.S.–China Tariff Escalation

• CPI Update

• Deal of the week: Ripple acquired Hidden Road

• What to look out for this week!

Markets 

• A Week Defined by Historic Swings: Tariff-related headlines drove extreme volatility across global markets, with sharp intraday reversals highlighting investor uncertainty. On Tuesday, the S&P 500 climbed as much as 3.8% before reversing course to close down 1.6%. The volatility continued Wednesday, when the index surged 9.5%—its biggest one-day gain since 2008. Despite the noise, major U.S. indexes posted strong gains: the NASDAQ jumped more than 7%, the S&P 500 rose nearly 6%, and the Dow added around 5%. Still, the rebound wasn’t enough to fully recover from the deeper losses suffered the week prior.

• Yields Soar Amid Market Turbulence: U.S. Treasury prices dropped sharply as fixed-income markets absorbed a fresh wave of volatility, sending yields surging across the curve. The 10-year yield jumped from around 4.00% to 4.47% by Friday, while longer-dated Treasuries closed even higher at 4.85%, reflecting growing uncertainty and cross-asset stress.

• High Anxiety, Fast Fade: Investor fear spiked early in the week as the Cboe Volatility Index (VIX) briefly touched a five-year high on Monday, reflecting heightened expectations of near-term market turbulence. But despite a series of sharp intraday swings, volatility eased by week’s end, with the VIX ultimately falling around 17%.

• Gold Hits Record High: Gold extended its rally, rising for the fifth time in six weeks and breaking above the $3,200 mark for the first time ever. By Friday afternoon, the precious metal was trading around $3,250—up 7% on the week and 22% year to date—as investors sought safety amid market uncertainty.

• Solid Start to Earnings Season: Major U.S. banks kicked off first-quarter earnings season on Friday, with early results pointing to continued strength. According to FactSet, analysts expect S&P 500 companies to report an average earnings increase of 7.3% year over year. If that trend holds, it would mark the seventh straight quarter of earnings growth.

CPI Update

In March 2025, U.S. headline inflation came in lower than expected, with CPI rising 2.4% year-over-year, below the 2.6% estimate and down from 2.8% in February. Core CPI also cooled, increasing 2.8% YoY, under the 3.0% forecast and down from the previous 3.1%, signaling moderation in underlying inflation pressures. On a monthly basis, overall prices declined 0.1%, largely due to a steep 6.3% drop in gasoline prices. Despite this temporary relief, economists caution that recent tariff escalations—such as the U.S. imposing up to 145% tariffs on Chinese imports—may reverse these gains and reignite inflation in the coming months. The Federal Reserve faces a complex scenario as it balances the current easing of inflation against potential future price pressures stemming from trade policies.​

Economic Crossfire: The U.S.–China Tariff Escalation

The 2024–2025 U.S.–China tariff war has escalated sharply, with the U.S. imposing tariffs up to 145% and China retaliating with 125% on American goods. These actions have reignited inflation in the U.S., pushing inflation expectations to 6.7% and triggering negative GDP growth projections. China, facing falling exports and deflation, has responded with monetary easing and currency stabilization efforts. Unlike the 2018–2019 conflict, this trade war extends into tech, finance, and national security, signaling a broader geopolitical standoff. While both governments remain defiant, subtle diplomatic signals suggest that future negotiations may still be possible.

Attachments: Economic Crossfire: The U.S.–China Tariff Escalation (PDF)

Deal of the week: Ripple acquired Hidden Road

Ripple has agreed to acquire prime brokerage firm Hidden Road for $1.25 billion, marking one of the largest deals in the digital asset space. This acquisition positions Ripple as the first cryptocurrency company to own and operate a global, multi-asset prime broker, significantly expanding its institutional reach. Hidden Road, which clears over $3 trillion annually across various markets, plans to integrate its post-trade operations onto the XRP Ledger (XRPL), enhancing Ripple's decentralized finance (DeFi) capabilities. Additionally, Hidden Road will utilize Ripple's RLUSD stablecoin as collateral across its prime brokerage services, facilitating efficient cross-margining between digital and traditional assets. The deal is expected to close in the coming months, pending regulatory approval.

What To Look Out For This Week!

Monday: Goldman Sachs and M&T Bank report earnings

Tuesday: Bank of America, Citigroup, and United Airlines report earnings

Thursday: Taiwan Semiconductor Manufacturing Company, UnitedHealth Group, Netflix, American Express, Blackstone report earnings

We are two college students on a mission to immerse ourselves in the financial industry. We are eager to learn more and make new connections. Our goal is to share exciting and informative content that provides a broad picture of current events and offers valuable insights.

Founders: Ben Banchik, Zachary Singer

Additional Contributors: Willam Le

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