Podcast Summary: The Exchange — "Treasury Auctions and Tariff Actions"

Date: April 9, 2025
Host: Kelly Evans (CNBC)
Notable Guests: Rick Santelli, Diana Olek, Steve Liesman, Drew Mattis, Peter Boockvar, Jim Bianco, Scott Kronert, Emily Wilkins, Megan Casella, Eamon Javers, Steve Kovach, Jeff Kilberg

Overview of Episode

This explosive episode of "The Exchange" covers a whirlwind day in financial markets, where U.S. Treasury yields spiked, a crucial 10-year auction took place, and President Trump stunned markets by announcing a sudden 90-day pause and reduction on most recently imposed reciprocal tariffs—except on China, where tariffs were hiked further in response to retaliatory moves. The episode intricately weaves together the macroeconomic consequences, market reactions, policy uncertainty, and the evolving theme of U.S. trade and economic strategy.

Key Discussion Points & Insights

Treasury Market Turmoil and the 10-Year Auction

• Background: Overnight, U.S. Treasury yields soared, culminating in the 10-year yield hitting 4.50%, well above previous lows and causing broad concern.

• Rick Santelli [05:54]:

  • The 10-year auction, expected to be weak due to market precedents, was "stellar… aggressive pricing… a solid A."
  • "The existing [reopened issue] is more of a shock absorber to anything out of the ordinary than a normal primary first time offering."
  • "So much of the flight to safety trade is going through an unwind process in a much thinner market where many are sitting on their hands."
  • [05:54–08:49] Santelli and panel debate whether the selloff was due to China "dumping Treasuries," inflation fears, or unwinding of trades, ultimately leaning toward trade reversals and inflation expectations.

• Jim Bianco [04:24, 09:14]:

  • "The auction went extremely well...That's part of the nature of a broken market is you know, things don't behave like you would think."
  • Cites "tariff-driven inflation" as the main factor pushing yields up and the Fed on the sidelines.
  • "[W]e're worried about inflation, tariff driven inflation. I think that that is pretty much taken the Fed completely out of the picture. No matter how bad the economy gets, Jay Powell said on Friday we're going to have to worry about inflation more."
  • "Take a look at the two year break even. It's going straight up because of tariffs."
  • [09:14–10:41] Asserts the market is pricing in stagflation risk, with inflation outweighing weak growth in monetary policy calculus.

Liquidity, Market Function, and Global Moves

• Drew Mattis [01:04, 12:10]:

  • Warns of outsized liquidity drains around tax day as investors liquidate assets to pay taxes.
  • "One of the things is tax days coming up, which means a big liquidity drain from the market as people sell securities or just basically move cash and send it to the US treasury."
  • Predicts "a full point of [Fed] cuts," but expects they’ll be lagged and reactive to a labor market downturn.

• Peter Boockvar [01:32, 11:36]:

  • Draws parallel to emerging markets: rising rates amid currency weakness is “what you usually see in a third world country."
  • Notes technical market issues close to tax day, with liquidity thinning and spreads widening.
  • "We're buying the shorter end of the curve. I don't see any reason to take much duration risk… I think we're in a bond bear market."

• International Context [10:44]:

  • Simultaneous yield increases in the UK, Australia, New Zealand, and Canada suggest broader, geopolitically linked market pressures, not merely a U.S. or China phenomenon.

Tariffs, Trade Policy, and Sudden White House Reversal

• Markets Initially React to Uncertainty and Hawkish Moves:

  • Intense volatility followed reports President Trump was escalating China tariffs to 125% (from 104%) and real-time news that Treasury Sec. Scott Bessant canceled a Hill meeting to confer with the President.
  • [19:09] “We’re being thrown everything all at once.” – Peter Boockvar

• The Surprise Tariff Pause

  • [~25:00–33:00] Within minutes, Trump posts on Truth Social:
    • All non-retaliating trading partners get a 90-day "pause" with tariffs rolled back to 10%, down from recent max rates.
    • China receives a tariff hike to 125%, exacerbating trade tensions.
  • Markets soar in response—a massive intraday rally (Dow up over 2,000 points; Nasdaq +9.6%) as trade war escalation risk recedes for non-China nations.
  • Confused investor sentiment is captured: “[W]e came in this hour with the Dow up 2 or 300 points…The Dow has gone from up about 300 points to up 1500 points with very little explanation.” – Kelly Evans [24:53]

• White House and Administration Explanation

  • Scott Bessant (Treasury Secretary) [38:01]:
    • Praises Trump's courage and "negotiating leverage."
    • "Every country in the world who wants to come and negotiate, we are willing to hear you. We're going to go down to a 10% baseline tariff for them, and China will be raised to 125 due to their insistence on escalation."
    • [41:20] “President Trump created maximum negotiating leverage for himself…We have just been overwhelmed…by the response from mostly our allies who want to come and negotiate in good faith.”
    • [42:18] Insists the pause is due to the overwhelming number of requests to negotiate, not because of market turmoil: “No, it's because…of the large number of inbounds. We've had more than 75 countries contact us and I imagine after today there will be more. So it is just a processing problem.”
    • Maintains that the U.S. will conduct "bespoke" deals with all interested countries within 90 days.

• Political and Market Analysis

  • Steve Liesman [54:06]:
    • "You can say this is relief, but there's another 90 days of uncertainty to come… You could also try to spin this as a victory, or you could see this as a failure of policy and leadership on the part of the White House."
    • Points out that the administration’s strategy was unclear and reactive: “The plan was made up that day…He [the President] didn't just flinch, but he ducked when it came to what was coming his way here."
    • Cautions that even post-rally, the market remains well below pre-crisis levels, and “The market doesn't like these [10%] tariffs either.”

• Broader Strategic Context & Supply Chains

  • Steve Kovach [33:34–35:10]:

    • Highlights the gravity for Apple and global supply chains: "Between 80 and 90% of all iPhones are still made in China…it's a relief, there's no doubt about it," but "still a lot of work to be done here on the China front."
    • Apple, Nike, and other "Mag 7" cap names see historic rebounds, as S&P re-prices tariff risk.

  • Scott Kronert (Citi) [26:24, 27:27, 56:21]:

    • Argues the rally reflects relief that "the President [has] pull[ed] back…alleviating some of that [tariff] stress."
    • Notes the episode underscores "it's not the what of the policy as much as it is the how"—process and unpredictability were more damaging than the policy specifics.
    • Anticipates market focus will remain on growth and tech shares, but warns “doesn’t mean we’re out of the woods…worst case now off the table.”

Notable Quotes & Memorable Moments

• On Market Chaos and Broken Market Structure:

  • "The auction went extremely well. There was a lot of buying that came in...that's part of the nature of a broken market is things don't behave like you would think." — Jim Bianco [04:24]
  • "So much of the flight to safety trade is going through an unwind process in a much thinner market." — Rick Santelli [06:49]

• On Trade and Tariff Policy:

  • "We’re being thrown everything all at once." — Peter Boockvar [19:09]
  • "Every country in the world who wants to come and negotiate, we are willing to hear you....China will be raised to 125 due to their insistence on escalation." — Scott Bessant [38:01]
  • "If somebody could tell the president about the capital account, the other side of the trade deficit, we might be in a better position here…we apparently don't want that deal. We want a better deal." — Jim Bianco [17:33]

• On Sudden White House Reversal & Market Relief:

  • "The President has just announced a 90-day pause, capital letters PAUSE, and a substantially lowered reciprocal tariff during this period of 10%, also effective immediately....Wow, this is a shocking turn of events." — Kelly Evans [25:55]
  • "You could also try to spin this as a victory, or you could see this as a failure of policy and leadership." — Steve Liesman [54:06]

• On Global Trade & U.S. Position:

  • "We finally have a president here at the White House who is playing the long game, who is doing what is right for the American worker in our industries here at home." — White House Press Secretary Caroline Leavitt [50:13]

• On Market Sentiment:

  • "Be cool, Kelly." — Jeff Kilberg [57:45]
  • "It felt different this time… but once again when you see the VIX go above 60 that's the time to buy equity." — Jeff Kilberg [58:55]

Important Timeline

| Time | Segment/Event | |----------|--------------------------------------------------------------------------------| | 00:04 | Show opens, focus on 10-yr Treasury auction and spike in yields | | 01:04 | Drew Mattis outlines liquidity/liquidity risk around tax day | | 01:32 | Peter Boockvar discusses emerging market parallels | | 03:53 | Jim Bianco: "something broke" in bond markets | | 04:24 | Bianco explains why inflation/tariff fears sidelined the Fed | | 05:54 | Rick Santelli recaps unexpectedly strong 10-yr auction | | 08:49 | Panel debates primary causes—China, inflation, trade reversals | | 12:10 | Drew Mattis expects delayed but large rate cuts | | 19:09 | Boockvar: "We're being thrown everything all at once." | | 24:53 | Market explodes higher after news of canceled Bessant meeting | | 25:55 | President's Truth Social post: tariff pause and China escalation announced | | 26:24 | Scott Kronert (Citi): unpacking the market’s tariff relief rally | | 30:25 | Eamon Javers: White House has no additional color/context on decision | | 33:34 | Steve Kovach: huge impact for Apple/supply chains | | 38:01 | Secretary Bessant and Press Secretary Leavitt address press on sudden pivot | | 42:18 | Bessant: move is about negotiation requests, not market reaction | | 53:42 | Liesman: White House acted without Wall Street input, after markets "ducked" | | 56:21 | Kronert: rally reflects process relief, but “not out of the woods” | | 57:42 | Jeff Kilberg: "Be cool, Kelly"—market sentiment on display |

Summary Flow & Tone

The tone vacillated between intensity, analytic rigor, disbelief, and relief as markets swung wildly and news evolved in real time. Guests candidly assessed the structural dysfunction and volatility in bonds and stocks, often admitting confusion ("Nobody knows why!"—Kelly Evans) at the speed of developments and reversal from Washington. Among analysts, the language reflected both skepticism of the administration's process and awe at markets’ capacity for re-pricing on policy pivots. White House and cabinet officials projected confidence, emphasizing "courage" and negotiation, while market commentators remained healthily circumspect about the lasting effects and future uncertainty.

For Listeners: Core Takeaways

• Unprecedented Bond Market Volatility: Technical breaks, liquidity challenges, and confusion over policy left both traders and policy experts scrambling for explanations.
• Tariff Policy Whiplash: President Trump’s all-at-once pause on reciprocal tariffs (except for China) erased immediate worst-case scenarios for most U.S. trade partners, sparking a gigantic relief rally.
• Fed Still in Limbo: Panelists largely agree the Fed remains sidelined by inflation risk—tariff-driven price increases keeping rate cuts at bay despite market stress.
• Global Realignment: Tariffs, a weakening dollar, and shifting foreign participation in U.S. debt point to longstanding changes in the world’s financial architecture.
• Uncertainty Remains: Despite the market bounce, guests caution the next 90 days and the ultimate outcome of negotiations are highly unpredictable.
• Notable Moment of Drama: Never before had panelists seen markets move so far, so fast—charts even failing to keep up with the rally.

Final Thoughts

If you missed this episode, you missed a news-cycle for the history books: a demonstration of how quickly global markets, policy, and the information environment can change—and of how central Washington’s decisions have become to both Wall Street and Main Street.

For more immediate analysis, tune into CNBC’s Power Lunch as coverage continues.