Trump "surrenders to the market," but Wall Street remains worried about uncertainty, especially regarding U.S. Treasury bonds

Despite Trump's suspension of most "reciprocal tariffs" leading to a surge in the stock market, the muted response from the bond market suggests that investors remain concerned about inflation and the uncertainty of trade policies.

On Thursday, according to Shanghai Securities News, during overnight trading in the U.S. stock market, President Trump posted on social media that he had authorized a 90-day suspension of tariffs on certain countries, significantly reducing tariffs to 10% during this period. Following the announcement, the U.S. stock market experienced a strong rebound, with the S&P 500 index soaring by 9.5% and the Nasdaq Composite index skyrocketing by 12%, marking their best single-day performances since 2008 and 2001, respectively.

The stock market was ecstatic, but the bond market reacted relatively calmly after Trump's speech. The yield on the 10-year U.S. Treasury bond briefly rose by more than 20 basis points overnight, but gradually retraced its gains after Trump's remarks, followed by fluctuations. As of the time of publication, the yield on the 10-year U.S. Treasury bond returned to below 4.3%, at 4.291%.

Trump's suspension of most tariff plans suggests that the risks currently facing the U.S. have not been eliminated; rather, they have become more complex due to policy uncertainty and potential inflationary pressures. Bob Michele, Chief Investment Officer at JPMorgan Chase, pointed out that there has not been a "huge shift" in the bond market:

There is still a lot of uncertainty. The bond market is focused on inflation being far above (the Federal Reserve's) target, while the Fed has told us they will not cut rates.

Citigroup also expressed a similar view in a report to its clients, stating:

The suspension of reciprocal tariffs does not mean that the U.S. economy has avoided a slowdown in growth and rising inflation