Trump's Trade War Impacts Corporate Bonds, Stock Market

President Trump's trade war is having a significant impact on corporate borrowing and market dynamics, as major U.S. corporations are facing challenges with a lack of bond issuance amidst stock market volatility. Investors are shifting from stocks to bonds in response to tariffs, indicating a growing concern about economic growth rather than inflation, with GDP growth projected to contract. The bond market is now outperforming stocks, reflecting a change in sentiment as bond yields drop and the appeal of fixed-income assets rises amidst fears of a slowing economy. Analysts suggest that the Federal Reserve may cut interest rates in response to these pressures, further benefiting bonds. Overall, the economic landscape is shifting, with indicators showing softening manufacturing activity and declining consumer confidence. This change marks a departure from the previous 'Trump trade' that favored rising equities and Treasury yields.