Wall Street slumps on Trump’s tariffs threat
Gold prices increased by 3.4 percent and silver prices increased by 5.7 percent. Both reached records. Such assets are often considered safe havens in times of geopolitical turmoil.
It looks like trade tensions have short-circuited Bitcoin’s recent rally. The cryptocurrency rose above US$96,000 late last week but fell back to US$90,300.
Treasury yields were mixed in the bond market. The yield on the 10-year Treasury note rose to 4.27 percent from 4.23 percent at the end of Friday. The yield on the two-year Treasury bond remained steady at 3.60 percent as of late Friday.
Trump linked his aggressive stance on Greenland to his decision last year not to award him the Nobel Peace Prize, telling the Norwegian prime minister in a text message on Monday that he no longer felt “obliged to think only about Peace.”
Trump’s message to Jonas Gahr Støre appeared to fuel a dispute between Washington and its closest allies over threats to seize Greenland, a self-governing territory of NATO member Denmark.
Trump’s threats have sparked outrage across Europe and excitement in diplomatic activity as leaders consider possible countermeasures, including retaliatory tariffs and the first use of the European Union’s anti-pressure tool.
As world leaders meet this week at the World Economic Forum annual meeting in Davos, Switzerland, the trade and political conflict with Europe is heating up. Wedbush Securities analyst Dan Ives said the new tariff threat was “clearly an overhang of the conference” but would likely begin to simmer over time.
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“Our view is that, as was the case last year, the barking on this issue will be worse than the biting and tariff threats as negotiations continue and tensions between Trump and EU leaders finally calm,” Ives said in a note to clients.
Tariffs have been looming over the US and global economies since 2024. Trump’s tariff policy was confusing and unclear; it involved the threat or imposition of tariffs and was often followed by delays or cancellations. Existing tariffs are increasing pressure on already high prices of goods, and the threat of more is making it difficult for businesses to plan ahead.
The threat of tariffs that would reignite already high inflation could further complicate the Federal Reserve’s job. The central bank has cut its benchmark interest rate three times in late 2025 to help support the economy as the job market weakens. However, it adopted a more cautious approach due to the risk of rising inflation, which is above the Fed’s 2 percent target.
Lowering loan interest rates can help support economic activity, but it can also fuel inflation, which could negate the benefits of lower interest rates.
The Fed and Wall Street will get another update on inflation on Thursday, when the government will release the personal consumption expenditures price index (PCE). This is the Fed’s preferred measure of inflation.
The Fed meets next week for a policy meeting on interest rates, and Wall Street is betting that the central bank will keep its benchmark interest rate steady.
Wall Street is also in the midst of the latest round of corporate earnings that could help provide more insight into how companies are dealing with uncertainty from tariffs, geopolitics and cautious consumers.
Industrial and consumer group 3M fell 7 percent after reporting mixed results in the latest quarter. United Airlines and Netflix will report their results after the market closes on Tuesday. Companies from a wide range of industries will report results this week, including Johnson & Johnson, Halliburton and Intel.
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