Global markets have reacted to the disruption caused by tariffs, leading to a significant drop in both oil prices and Treasury yields.
Economists have expressed concerns that the weakened energy demand could potentially trigger a recession. As a result, investors have turned to safer assets like Treasury bonds, while crude oil prices have recently plunged by 15%.
President Donald Trump’s tariffs have caused increased uncertainty in the markets, reducing energy demand and contributing to instability.
Although there are expectations that ongoing negotiations may reverse these trends, both oil prices and Treasury yields remain at low levels.
In a statement, Trump said, “Oil prices are down, interest rates are down. We have everything down at levels that nobody ever thought possible.”
Crude oil prices and U.S. equities have shown an unusual correlation recently, with analysts noting a one-month correlation of 0.9. This correlation highlights economic fears rather than inflationary pressures.
Gasoline prices are continuing to fall as a result of the drop in crude oil prices. GasBuddy’s head of petroleum analysis, Patrick de Haan, commented, “Motorists can expect gas prices to begin falling nearly coast-to-coast, with oil now at its lowest level since the early days of the pandemic in 2021.”
De Haan also pointed out, “In addition to falling oil prices, the stock market has dropped sharply, and the risk of a recession has increased, which is raising the likelihood of reduced global energy and oil demand. This is sending prices even lower.”
Meanwhile, gold investment has surged as fund managers seek safer options, fleeing from oil futures amid the market volatility. Demand for gold has reached record highs, reflecting a shift toward risk-averse assets.
Experts suggest that while lower oil prices and borrowing costs may offer temporary benefits to consumers, these trends are also indicators of shrinking economic output and heightened recession risks.
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