President Trump hit the pause button on his trade war Wednesday — with everyone except China, whose tariff rate was instead raised to 125%.

Stocks bounced like a Superball in response, but the respite offered no immediate consolation for bond markets, where a rapid selloff in US Treasurys has left investors wondering if the traditionally safe assets are as reliable as they once were.

Losing Faith

Treasury Secretary Scott Bessent has said for weeks that Trump’s focus is on getting the 10-year yield down, which would decrease the cost of debt payments. He went so far as to say doing so was more important to the administration than the Federal Reserve’s monetary policy.

But the sudden decision to announce those now on-hold global tariffs last week had exactly the opposite effect. US Treasury bonds generally don’t have high interest rates because they have been seen as a safe investment. But the 10-year yield spiked to 4.5% at one point Wednesday, before finishing the day at 4.3%. That’s above the 4.1% to 4.2% where it floated on April 2, otherwise known as Liberation Day.

When yields rise, it suggests a selloff, and it also means likely higher costs for companies to borrow as well as the government. And, because Treasurys are seen as a safe haven, yields tend to go down in times of economic stress, which has made the bond market activity this week all the more alarming. Indeed, Deutsche Bank wrote before Trump announced the 90-day tariff pause that rising yields are a sign that “the market has lost faith in US assets,” adding it is playing out “in real-time at a faster pace than even we would have anticipated.” But it wasn’t just the selloffs that signaled investors rethinking what is and what isn’t a safe haven:

• German government bond yields, the eurozone’s benchmark, fell in a sign of strengthening demand, highlighting a potential safe haven across the Atlantic.
• Gold, meanwhile, rose 2.6% for its best day in 17 months. The fact that the traditional safe haven has decoupled from US Treasurys offered supporting evidence to Deutsche Bank’s assessment that US assets were, for a day at least, not viewed as offering their historical strategic advantage.

Serious Upside: Even if it didn’t fully calm bond markets, Trump’s 90-day pause on tariffs prompted a gigantic sigh of relief from many market observers. The S&P 500 rocketed up 9.5% after several brutal days of trading for equities. And Goldman Sachs, hours after it said Trump’s tariffs forced it to conclude a recession was its base-case economic forecast, said that is no longer the case — thanks to the pause.

In 2021, Jeff Bezos became the second billionaire to visit space (after Richard Branson) and, as of yesterday, he is the second billionaire with an internet satellite constellation (after, of course, Elon Musk).

Bezos’ Amazon on Wednesday launched the first batch of satellites set to form part of a massive network that will beam the internet down to earth and challenge Musk’s already operational Starlink service. There’s a lot of catching up to do, but Amazon isn’t angling to be a bit player.

Rockets and Deep Pockets

Amazon’s Kuiper is entering the satellite internet race six years behind Starlink. The subsidiary of Musk’s privately held SpaceX already has roughly 8,000 satellites in orbit and 5 million customers who have come to rely on the (out of this) world wide web from above.

The heaps of advance time have allowed Starlink to eclipse the competition in the low earth orbit satellite internet space, where it owns two-thirds of active satellites at an altitude of 1,200 miles or less. On Wednesday, Kuiper’s grand liftoff involved a mere 27 satellites, a far cry from the 578 the company says it needs before it can start selling internet connections to consumers and a galactic distance from the roughly 3,200 it’s been permitted to launch by the Federal Communications Commission. While Kuiper won’t generate any revenue for a while, Amazon is still using its enormous influence to position itself for some corporate Star Wars:

• Kuiper has won contracts this year with the British government (to study advanced space communications) and Australia’s state-owned National Broadband Network (to offer rural satellite internet). It also agreed with Indonesia’s government in March to invest $20 million in developing satellite infrastructure for the island nation.
• Kuiper has a significant ace card: Amazon’s roughly 310 million active users, about 230 million of whom are in the United States, give it a gigantic potential customer base who already look to Amazon for online shopping and streaming.

Kuiper says it has booked over 80 launches with various companies to deploy more satellites into orbit — some of them, funnily enough, are with SpaceX.

A Line to the Oval Office: Starlink parent SpaceX is no slouch at the moment, either. While Musk’s Tesla hasn’t exactly benefitted from his role as a senior White House advisor so far this year (see the moon crater-size dent in Tesla’s share price since Jan. 1), his privately held space venture has seemingly done better. Thanks to a move by the Commerce Department last month, Starlink is now eligible to participate in a $42 billion rural broadband program being rolled out by the federal government, which previously excluded the company. The Federal Aviation Administration is also leasing Starlink kits for free, although Verizon holds the $2.4 billion contract to overhaul the agency’s telecommunications system.

The vultures of the stock market are making a killing. Short sellers, traders who wager on shares falling, made $159 billion in just six days as stocks dropped amid a global trade spat.

Traders betting against SPY, an exchange-traded fund that tracks S&P 500 stocks, racked up more than $6 billion in profits this month, according to data firm S3 Partners. Short sellers also made billions betting on the descent of individual Big Tech companies, earning their biggest paydays from Apple, Nvidia, and Tesla, respectively.

S3 said the vast majority of recent short trades were profitable, with 97% of every dollar shorted making a return. Investors have another $46 billion in shorts penciled in for April.

Bear With Us

Investors have been heavily shorting major tech companies for months. Much of the shorting focused on companies that depend on other countries for hardware (see: semiconductor chips, automobiles) as concerns rise about global trade.

When short sellers are successful, they can put downward pressure on stocks as investors hop on their pessimistic bandwagon. In times of market volatility, regulators have stepped in to limit or ban short selling to stop investor confidence from spiraling.

A swath of countries restricted short selling during the fallout from the 2008 financial crisis and again in 2020 as markets masked up for Covid-19. Now:

• History may be repeating itself as countries react to market turmoil in the wake of President Trump’s tariff announcements and ensuing geopolitical chaos.
• The Thai stock market temporarily banned short selling this week, and Taiwan imposed curbs on the practice, including limiting the number of shares traders can short.

Two-way street: Regulators are also wary of shorts because an influx of the trades can cause volatility when markets move back into the green. Following Trump’s tariff pause yesterday, shorted stocks could whipsaw to send markets higher. That’s because when short sellers’ predictions don’t pan out, they buy stocks at a premium to cover their positions, sending shares soaring in a phenomenon known as a short squeeze. When short sellers kicked off the year with major losses after the market’s winter rally, they squeezed the stocks of Hims & Hers and Super Micro Computer higher.