President Trump decided to halt the implementation of reciprocal tariffs following pressure from the bond market. Prior to this decision, the market had been in turmoil, with stocks declining and the S&P 500 close to entering a bear market. The turning point was the unexpected increase in long-term Treasury yields, which seemed to prompt the president's action.

Trump acknowledged the influence of the bond market, stating that he had been monitoring it closely as the situation made investors uneasy. The 10-year yield saw a significant rise, reaching 4.47% during the week, a substantial increase from the low of 3.87% earlier in the week. This surge was the most significant in three days since December 2001, and it signaled a shift back to late-February levels, which concerned the president due to his preference for lower rates.

Similarly, the 30-year Treasury yield experienced a notable increase, climbing 25 basis points and hitting its highest level since November 2023. The rapid rise in long-term yields was reminiscent of the market shock during the 2020 pandemic.

The fluctuations in the bond market served as a warning signal to investors, as illustrated by Kathy Jones, chief rates strategist at Charles Schwab. She emphasized the importance of bonds in influencing various market aspects like stock valuations, borrowing costs, and overall financial conditions. Jones stressed that when the bond market indicates a problem, it is crucial to take notice as it can have wide-reaching consequences.

As concerns escalated among economists and business leaders, warnings about a potential tariff-induced recession grew more prominent. JPMorgan CEO Jamie Dimon highlighted these risks, suggesting that market reactions could worsen without progress in negotiations. Trump acknowledged Dimon's remarks and, in response, reconsidered the planned tariff increases. Despite a brief stock market rally, attention shifted to the escalating trade tensions with China, leading to increased tariffs on both sides.