Second Week of April 2025

THE WELL-TH NOTES

Weekly data-driven insights on the markets and economy

1. China’s counterstrike

On Wednesday, China escalated its response to US tariffs by increasing levies on American imports to 84%, up from 34%, starting on April 10. This retaliatory move intensifies the trade war between the world’s two largest economies, as both sides impose tariffs exceeding 100%. The ongoing tariff battle has spooked global markets, triggering sharp declines in major stock indexes and raising concerns over economic slowdown, higher inflation and reduced corporate profits.^[i]

2. Bond market meltdown

The bond market was in turmoil on Wednesday as yields rose sharply amid growing recession fears, contradicting typical market behavior in which investors flock to bonds for safety. The 10-year Treasury note yield surged to 4.37%, its highest level since February, as the US-China trade conflict escalates. This unexpected bond sell-off, coupled with weakening demand at Treasury auctions, is raising concerns that foreign investors may be dumping US government securities.^[ii]

3. Mortgage madness

Mortgage demand surged by 20% last week, driven by a sharp drop in mortgage rates, reaching the highest level since September 2024. Refinancing activity spiked by 35%, while purchase applications rose 9%, with homebuyers taking advantage of lower rates on larger loans. The boost in demand may be short-lived, however, as rates rose again this week.^[iii]

4. Trump tariffs tank oil

US crude oil prices fell below $60 per barrel on Tuesday for the first time in four years as fears mount that President Trump’s escalating tariffs on China could spark a global trade war. Traders are also rattled by OPEC+’s move to boost supply, adding to concerns of a looming recession.^[iv]

5. Harvard hedges its bets

On Tuesday, Harvard University announced plans to borrow up to $750 million through taxable bonds as part of contingency planning, following the Trump administration’s review of $9 billion in federal funding to the school over alleged campus antisemitism. The administration’s letter outlined conditions for continued funding, including restrictions on masked protesters, as similar measures hit other Ivy League schools such as Princeton and Columbia.^[v]

6. US consumer borrowing contracts

US consumer borrowing unexpectedly declined in February for the first time in three months, driven by a sharp drop in credit card balances and non-revolving loans like auto and student loans. Total credit fell nearly $810 million, defying economists’ expectations of a $15 billion rise. The data highlights growing financial caution among households amid high borrowing costs, elevated prices and mounting economic uncertainty. ^[vi]

^[i] Pound, Jesse. “China slaps 84% retaliatory tariffs on U.S. goods in response to Trump.” CNN, 9 April 2025, https://www.cnbc.com/2025/04/09/china-slaps-retaliatory-tariffs-of-84percent-on-us-goods-in-response-to-trump.html. Accessed April 9, 2025.
^[ii] Melloy, John. “Bonds crater, 10-year yield briefly spikes above 4.5% in confounding move that’s worrying Wall Street.” CNBC, 9 April 2025, https://www.cnbc.com/2025/04/09/us-treasury-yields-investors-weigh-new-reciprocal-tariffs-.html. Accessed April 9, 2025.
^[iii] Olick, Diana. “Mortgage rates slingshot higher as tariff uncertainty roils markets.” CNBC, 8 April 2025, https://www.cnbc.com/2025/04/08/mortgage-rates-higher-tariff-uncertainty.html. Accessed April 9, 2025.
^[iv] Kimball, Spencer. “U.S. crude oil closes below $60 per barrel as selloff continues on fears of full-blown trade war.” CNBC, 8 April 2025, https://www.cnbc.com/2025/04/08/oil-prices-today.html. Accessed April 9, 2025.
^[v] “Harvard plans to borrow $750 million after federal funding threats.” CNBC, 8 April 2025, https://www.cnbc.com/2025/04/08/harvard-plans-to-borrow-750-million-after-federal-funding-threats.html. Accessed April 9, 2025.
^[vi] Golle, Vince. “US Consumer Borrowing Unexpectedly Declines in Broad Pullback.” Yahoo, 7 April 2025, https://finance.yahoo.com/news/us-consumer-borrowing-unexpectedly-declines-190831194.html. Accessed April 9, 2025.