Market anxiety spiked following a landmark federal appeals court decision that ruled most of President Donald Trump’s global tariffs illegal, establishing that only Congress can authorise such sweeping measures. Trump immediately signalled a Supreme Court appeal, prolonging legal and trade tensions that threaten to disrupt global supply chains and bilateral deals.
For India, the ruling carries major significance. In the last few weeks, the Trump administration has imposed tariffs up to 50% on key Indian exports, especially textiles, gems, auto parts, and seafood, citing India’s trade relationship with Russia. These high duties have hurt labour-intensive sectors and MSMEs, prompting Delhi to seek alternative markets and accelerate domestic reforms.Bond yields surge, risk appetite fadesCompounding the pressure, US Treasury yields spiked as markets braced for the fiscal implications of potential tariff refunds. The yield on 10-year Treasuries rose to 4.29%, and the 30-year yield soared past 4.98%—levels not seen in years—making borrowing costlier for both companies and consumers.
Globally, bond yields hit multi-year highs, reflecting investor preference for safer assets amidst growing fiscal jitters. Gold prices also climbed to a record above $3,500 per ounce, underscoring the flight to safety.
What’s next for US markets?
The sell-off is happening ahead of the important August jobs report scheduled for later this week, which could influence the Federal Reserve’s decision on whether to cut interest rates.
Traders are currently expecting a 25 basis point cut in September, with roughly a 90% probability priced in. However, ongoing inflation concerns and geopolitical tensions could change that outlook.
First Published: Sept 2, 2025 9:18 PM IS
