Stocks, US Treasury bonds, USD, and Bitcoin all fell in value during President Trump's first 100 days in office, while gold hit a new record.
On April 29, US President Donald Trump attended a rally to celebrate his first 100 days in office, praising the US economic achievements during this period. "We had the greatest economy in the history of our country. We did very well and we are doing even better now," he said in Warren, Michigan.
On this occasion, the White House also highlighted progress in curbing inflation as well as investment commitments from large companies.
"Within 100 days of President Trump's second term, Americans saw their first monthly decline in prices in years in the March inflation report. Meanwhile, industry leaders from Apple to Hyundai to Nvidia pledged trillions of dollars in historic investments to bring manufacturing back to the United States," White House spokesman Kush Desai said.
Along with the positive highlights, most major assets that investors hold, such as US stocks, witnessed negative developments, except for gold.
US stocks fell
US stocks had the worst first 100 days of a presidential term since President Richard Nixon's second term in 1973. Accordingly, the S&P 500 fell 7.8% in the first 100 days of Mr. Trump's return to the White House, only lower than the 9.9% in the first 100 days of President Nixon's second term more than half a century ago.
The decline was largely due to Mr. Trump's trade policy. The market peaked on April 3, after the reciprocal tariffs were announced. From its most recent peak on February 19 to that point, the S&P 500 fell 19.4%, very close to the 20% mark, considered the threshold marking a bear market.
Early April, the Cboe Volatility Index (VIX), often called Wall Street's "fear gauge," hit a five-year high. The move was a stark contrast to the optimism that swept Wall Street after Trump's election, when investors were expecting a pro-growth, business-friendly administration.
"The recent developments don't necessarily cause the market to fall throughout the term, but they can set the tone for the term, if you look at history," said Matt Gertken, chief strategist for US geopolitics at BCA Research in Montreal, Canada.
US Treasury yields rise.
Along with stocks, the usually quiet US Treasury bond market has been "stormy". Yields, which have been falling steadily in the first months of the year, jumped sharply immediately after the announcement of the corresponding tax. In total, the yield recorded the second-highest increase in the history of US presidents, only behind the first term of former President Bill Clinton, according to the ICE Bank of America United States Treasury Index.
Treasury bond yields rise when their prices fall, which usually occurs when investors reduce demand due to concerns about the US economic outlook. The recent sell-off has raised concerns that foreign investors, who own about 30% of the $29 trillion worth of US Treasuries, are looking to offload their holdings.
Many see this as a temporary phenomenon, with hedge funds and short-term investors forced to sell bonds to raise cash. However, Oxford Economics notes that the market moves suggest a broader exodus from the US from “investors of all stripes”.
More worrying is the possibility that global investors are losing confidence in the relative safety of the US financial system. That means they will demand higher yields to compensate for the risk of holding US government debt, and as a result bond yields will rise.
Weakening USD
The greenback has fallen sharply in recent months, with the Dollar Index, which compares the greenback to a basket of other major currencies, falling about 9% in the first 100 days of Trump’s term. This is the steepest drop ever in the first months of a president.
One of the sharpest declines came after Trump announced reciprocal tariffs on all trading partners on April 2. Although he has temporarily postponed the imposition, the USD has not yet responded to the US dollar’s decline.c. Thierry Wizman, global FX and interest rates strategist at Macquarie, said the biggest lesson from the first 100 days is that the US agenda is “negative for the dollar”.
White House spokesman Kush Desai said the administration is committed to protecting the strength and power of the greenback. Trump’s recent softening of his rhetoric on tariffs has sent stocks and the dollar bouncing back slightly. However, strategists pointed to signs that investors are reallocating their holdings.
Jens Nordvig, founder of Exante Data, said there is “a structural shift in asset allocation taking place” as investors around the world “look for alternative reserve currencies”. While Nordvig does not predict the dollar will lose its reserve currency status, many investors “will be looking to reduce their exposure to the dollar if they can”.
Gold Prices Soar
As U.S. stocks struggle, some investors have flocked to gold. The precious metal is often seen as a hedge against economic downturn, geopolitical uncertainty, or persistent inflation. All three of those scenarios have been top of mind for investors over the past few months.
As a result, gold prices have soared from $2,755 an ounce in January to a record high of more than $3,400 in April as the stock market has been volatile. In total, gold has gained 22% in the first 100 days of President Trump’s term.
In contrast to the S&P 500, gold has had its biggest gain in the first 100 days of a US president's term since President Richard Nixon's 39.1% gain in the first 100 days of his second term in 1973.
Spencer Hakimian, CEO of hedge fund Tolou Capital Management in New York, said he is increasing his allocation to gold and reducing his holdings of long-term US Treasuries because "we believe a crisis of confidence is now brewing in safe-haven assets denominated in US dollars."
However, after hitting a peak, gold prices may be entering a period of correction and slowing growth, according to experts. Bernard Dahdah, precious metals analyst at French investment bank Natixis, noted that gold prices fell as Mr. Trump used softer language on tariffs.
Bitcoin Slightly Down
Cryptocurrency advocates had been optimistic about President Trump’s ability to ease regulations on the industry. In his first week, the president signed an executive order establishing a digital asset task force, led by David Sacks, the White House special envoy for artificial intelligence (AI) and cryptocurrencies.
The president also rescinded a directive on cryptocurrencies issued by his predecessor, Biden, in 2022. The US Securities and Exchange Commission (SEC) also dropped a series of investigations into several Biden-era cryptocurrency companies just weeks after the new administration took office. Meanwhile, the Commodity Futures Trading Commission (CFTC), the Treasury Department, and the Federal Reserve (Fed) are set to release new guidance on enforcement and market definitions to clear up ambiguities.
However, Bitcoin prices have been falling for much of the first 100 days of his term, as risk-off sentiment dominates the market and Bitcoin trades more like a tech stock than an alternative to the US dollar.
The largest cryptocurrency has regained some of its advantage after Mr. Trump suspended reciprocal tariffs for 90 days. Overall, Bitcoin prices have fallen 9% during the first 100 days of his second term.
(via Reuters, Morningstar, The Hill)