Wall Street just hit record highs. Bonds are flashing warning signs. And Donald Trump is… Trump-ing again with tariffs.

If this all sounds like a financial thriller where nobody knows how it ends, you’re not alone. Global investors, economists, and armchair traders are watching the U.S. economy like it’s a Jenga tower: one wrong move, and it all comes crashing down.

Two Very Different Stories

Stocks (riskier assets) are soaring. Wall Street is loving AI, potential Fed rate cuts, and retail investors FOMO-ing into every dip.

Bonds, gold, and oil (safe-haven assets) are causing nervousness. Investors here think growth is slowing and tariffs could get ugly.

It’s like watching two weather forecasts for the same city. One says “sunshine,” the other screams “hurricane.” They can’t both be right.

Trump’s Tariffs Are the Joker in the Deck

After a brief pause in April, Trump is back with a tariff bang. Canada has been hit with a 35% duty. Most other trade partners? Getting slapped with 15–20% tariffs. Europe’s next on the list.

The weird part is that markets barely flinched.

Why? Because a dangerous mix of optimism and denial powers this late-stage bull market. Everyone’s either too hyped to care or too scared to say the rally might be built on sand.

As Amundi’s Mahmood Pradhan puts it:

“Things have settled down, but not in a positive way.”

This is code for, “we’re chilling in the eye of the storm.”

Stocks Are Still Sky-High

So, investors are betting big on tech innovation, especially AI. And there’s hope that the Fed will start slashing interest rates soon, maybe even under Trump’s pressure.

So far, tariffs haven’t shown up in inflation data. That is emboldening equity bulls.

And let’s not forget Bitcoin, which is hovering near $112,000, fueled by the same “risk-on” energy.

But even though everything looks good on the surface, underneath, the cracks are showing.

Bonds, Gold & Oil Are Sounding the Alarm

Gold is up 26% this year, sitting at a record $3,300/oz. That’s classic “I-don’t-trust-the-system” behavior.

While 10-year U.S. Treasury yields have dropped from 4.8% to 4.35%, usually a sign investors expect slower growth.

On the other hand, the U.S. dollar is down 10% against major currencies, which is another red flag.

And the World Bank? They’ve cut their global growth forecast for 2025 to just 2.3%, citing… you guessed it, tariffs and uncertainty.

What Could Go Wrong? Plenty

Wall Street is packed with everyday investors right now. If the market drops, the ripple effect could be brutal.

As Neil Birrell (Premier Miton) warns:

“Any stress in the U.S. economy that impacts the consumer… becomes a rather brutal and bloody downward spiral.”

The tax cut and spending plan are adding $3.3 trillion to the national deficit. That’s a huge debt load, and it could push Treasury yields up to 5%, which is a nightmare for borrowers.

Q2 earnings reports are about to drop, and if they show tariff damage to corporate profits?

Right now, stocks and bonds are pricing in opposite futures, and that is not sustainable.

Stocks are betting on soft landings and AI-fueled growth. Bonds are bracing for recession, higher debt, and geopolitical messiness.

Trump’s tariffs are the wild card, and we’re all just watching to see which side blinks first.

Stay sharp. The second half of 2025 is going to be a wild ride.