Fear jerked through financial markets as the global trade war warms up

* Wall Street ‘Fear Gauge’ above 40 * FX and Bond Market volatility jump * US Sovereign Credit Standard exchange on the rise * US Junk Bond spreads Surge to 17 months High * US Treasury returns fall as secure buying increases by Saqib Iqbal Ahmed New York, April 4 (Reuters)-Volatility on Friday. ‘Fear’ Fear ‘high, while other market indicators are increasing investors’ concerns about the ripple effect of President Donald Trump’s livestock levies. Worldwide stock markets have dropped at the prices and the oil prices fell for a second day on Friday, with the Nasdaq composite on the way to a bear market, as China imposed fresh tariffs on all US goods, raising concerns about an extensive global trade war. The CBOE volatility index, an option-based measure of the anxiety of stock investors about the market prospects, has risen to 15.54 points to a 45.56, the highest since August. The index was 11.97 points to 41.99. “A VIX at 40 is a sign of fear for sure,” says Joe Tigay, portfolio manager at Rational Equity Armor Fund. “Usually you see a 40 if there is something more than the usual selling … a kind of credit risk, margin risk, something that can cause an infection that can spread over and over to other asset classes,” Tigay said. Investors, who have been battered by a sharp sale this year – the S&P 500 is about 11% lower for the year – watch the volatility meter as an indication of market stress. The leap in anxiety was wide on Friday without the market being spared. In foreign exchange markets, the euro one month shot implied volatility to a year high from 9.68 as the common currency fell 1.1% against the dollar. The Greenback was beaten by fast -flowing news about Trump’s rates and countermeasures from other countries. “FX prices swung wildly and the dollar movement was the opposite of smooth,” said Helen Given, director of trade at Monex USA in Washington. Meanwhile, the US Treasury yields have fallen lower, as a good US job report has calmed some nerves. The yield on the 10-year Treasury note dropped to a six-month low of 3.86%, which was generally watching by 4%. Safe-Haven purchase from Treasury has sent returns, which are inversely moving to prices, dropped sharply in recent weeks, driven by concerns about the recession and moving expectations about the possible federal reserve policy. Trump’s new rates are ‘bigger than expected’ and the economic fall, including higher inflation and slower growth, is likely to be too, Federal Reserve chairman Jerome Powell said on Friday. Trump on Friday called on Powell to lower interest rates and said it was the ‘perfect time’ to do so. Investors do not expect volatility to subside quickly. “Until there is actually a change in the policy or proof of actual negotiations, the market will be under pressure,” said Kathy Jones, chief set revenue strategist at the Schwab Center for Financial Research in New York. US high yields corporate mortgage distributions, an important indication of financial conditions, rose their highest since November 2023, to 401 basis points as the world markets have been swimming. The short-term costs to ensure exposure to US government debt have climbed, with distributions on the US credit differences of six-month (CDS) market-based meters of the risk of a standard-which is increased to 47.48 basis points from Thursday, the highest since the mid-November 2023, according to LSEG data. Other indicators of market stress reflect the nervousness that results in high volatility, but no signs of complete panic yet. US exchange distribution of two-year-the-difference between two years exchange rates and the two-year-to-be-to-be-to-one yields on Friday since the regional bank crisis in March 2023. Still, shares remained in the middle of the market markets. Hedge funds around the world sold global shares on a net basis on Thursday on the largest amount of 1 day since 2010 amid a market collapse, Goldman Sachs told clients on Friday. The bank said portfolio managers mainly added bets on Thursday, although they also threw long positions. Global Equity Long/Short Hedge Funds wiped out their profits for the year Thursday and fell 4.2% on Friday morning, Goldman said in an intraday note. Meanwhile, after a “buy the dip” strategy, retail investors bought $ 4.7 billion in shares on Thursday, the highest level in the last decade, JP Morgan said in a note. “I’m just grateful that I’m not on the stock side,” Monex’s said given. (Reporting by Saqib Iqbal Ahmed; Additional Reporting by Chuck Mikolajczak and Carolina Mandl; Editing by Megan Davies, Chizu Nomiyama, David Gregorio and Sandra Maler)