Wait 72 hours before trading! The market has summarized the "Trump 2.0 Era Trading Guidelines"

After Trump's return to the American political scene, he frequently released policy information through social media, causing market turmoil. To avoid losses from rapid policy reversals, bond market investors have summarized the "72-hour trading rule": if there is no reversal within 72 hours of Trump's announcement, then trading actions can be taken.

Bond Market Investors on High Alert

Bond investors have suffered losses multiple times by immediately responding to Trump's tweets.

For example, after Trump threatened to impose a 200% tariff on European wine, several investment banks quickly conducted over-the-counter trades, betting on the decline of bond prices for related companies (such as packaging company Ardagh Group SA, Verallia, and label manufacturer Fedrigoni SpA).

However, a few days later, when the final tariff list was announced and did not include wine, bond prices quickly rebounded, catching early movers off guard. Similarly, the threat of a 50% tariff on Canadian steel was also quickly abandoned.

These frequent reversals have made bond investors wary of Trump's tweets.

The "72-Hour Rule": Seeking Certainty Amidst Repetitions

After reflecting on past experiences, some banks and investors have begun to adopt the "72-hour rule," which means avoiding action within 72 hours after Trump releases policy information to prevent losses from rapid policy reversals.

Media reports quote three senior bond market experts who say that after Trump releases any potential significant policy information, they will hold off on action for three days (72 hours). If his position has not changed or been retracted by then, the market is more inclined to believe that the policy may actually be implemented and trade accordingly.

Catherine Braganza, a fund manager at Insight Investment, stated:

"We no longer act immediately because there is always the risk of policy reversal. Investors are gradually becoming immune to this type of information."

Racing Against the "Tweet Storm": Time Zone Advantage and Accelerated Trading

In addition to observing after the fact, the market is also seeking to proactively avoid risks.

European bankers have found that leveraging time zone differences can buy them valuable time. They have begun to accelerate the bond issuance process, aiming to complete pricing and lock in investors before Trump "wakes up" to tweet and before potential emotional disturbances in the U.S. market open.

"Everyone is highly alert to 24-hour headline risks, especially with higher frequency during U.S. hours," admitted Matteo Benedetto, co-head of Morgan Stanley's EMEA investment-grade syndicate. "Completing trades before the New York market opens is definitely better."

This sense of urgency has changed operational practices: Irish telecom company Eircom Finance DAC unusually completed a junk bond issuance, roadshow, and pricing all in one day; even blue-chip giants like LVMH chose to finalize the terms of their €1.9 billion bond before 1 PM European time to avoid risks in the U.S. market.

Investment Focus Shifts to "Tariff-Resistant" Industries

Ongoing policy uncertainty, combined with economists estimating a 45% probability of a "Trump-induced recession" in the coming year, has prompted credit investors to reassess risks. Companies like General Motors, Mercedes-Benz, McDonald's, and Procter & Gamble may withdraw performance guidance or report sales declines, further reinforcing the market's risk-averse sentiment Against this backdrop, investors are beginning to favor non-cyclical industries that are less affected by trade frictions and have stable demand.

Braganza from Insight Investment stated that her company is focusing on canned tomato producers and mobile service providers. "People won't stop cooking because of tariffs, nor will they throw away their phones," she explained.

Some investors are also calling for a return to fundamental analysis, focusing on the core value of companies, but in the reality of deeply intertwined global supply chains, "it's easier said than done."

Perhaps, as Fabiana Fedeli from M&G Investments said, dealing with the risks of Trump's tweets is "more of an art than a science."