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Markets get the measure of Trump

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Opinion

The Long View

Markets get the measure of Trump

At the very first sign that the president is buckling on an unorthodox foreign policy decision, that is the time to pounce

* Katie Martin
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!Donald Trump stands with his head bowed and hands together, partially obscured by two uniformed individuals in the foreground.

*The important thing is the signal of when Donald Trump has had enough

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Katie Martin

Published6 hours ago

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“The stock market is quite brilliant,” Donald Trump pronounced this week.

The US president, flanked by some of his most senior officials, was speaking at the G7 meeting in France about his deal aimed at securing peace with Iran. “Every time we talked about the possibility of peace, the stock market shot up like a rocket ship,” he said. “It never went down . . . The stock market is more brilliant than anybody there is . . . other than me of course.”

On several important points here, the president is precisely right. Stock investors really have cracked the code, figuring out how to navigate around his sometimes scattergun pronouncements.

This has been a struggle for the past year and a half or so. It has been hard to discern which of Trump’s statements matter, which don’t, which are rooted in some kind of observable objective reality, and which are not.

But we can see now a pretty clear pattern, which is that at the very first sign that the president is buckling on an unorthodox foreign policy decision that has affected the market, that is the time to pounce. Worrywarts (myself included) do what they always do, and fret over the details. Does a ceasefire mean peace is coming? When does it free up global energy flows? But, but, but . . .

It is clear now: None of this stuff matters. The important thing is the signal of when the president has had enough. Hence, from the point right at the start of April when Trump first spoke of the war being over in “two or three weeks”, US stocks have pushed more than 14 per cent higher in a nice smooth line. Similarly, the moment the US president “paused” his massive increase in global trade tariffs in April 2025, that kicked off a breathtaking ascent in stocks that faced no interruption until the US started bombing Iran.

So, buying the dip remains undefeated. The alternative is to ignore these dazzling moments completely. If you had entirely disregarded both of these pretty significant moments in financial-market history and just sat in the S&P 500 index of US stocks since late March 2025, you’d now be up by 30 per cent.

In the relatively more dour government bond market, it remains a different story. US government bonds, or Treasuries, have never recovered from the drop in price they suffered around the start of the war. Investors in this market, who broadly consider themselves a more cerebral bunch than those in stocks, never bought the hints of a ceasefire with Iran. Bond prices have still not returned to square one, leaving borrowing costs markedly higher. With the prospect of interest rat