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The financial markets are currently experiencing a persistent decline, with no signs of recovery on the horizon.
As Bob Savage from the Bank of New York pointed out, “Yesterday was the markets’ denial phase. Today is the no relief phase.” His commentary highlights the ongoing instability and the absence of any immediate relief.
There is significant potential for further global market corrections, as the past three years have seen substantial risk accumulation during a period of global growth. Former Goldman Sachs strategist Robin Brooks notes that the financial markets serve as the “ultimate constraint” for political figures, including President Trump.
Brooks recalled a previous instance where “disorderly conditions in the Treasury market” compelled Trump to reconsider his stance with China back in April 2025. This serves as a reminder of how financial market turmoil can influence political decisions.
“It was disorderly conditions in the Treasury market that got him to back down vis-à-vis China back in April 2025,” he said.
“We’re moving in that direction very fast.”
Many investors have cashed in on the assumption that the president would reverse his unpopular decisions in the face of wide opposition.
“As much as people say he likes to only go in one direction and go maximalist, he often comes to a more negotiated outcome or settlement.”
And when it comes to Iran, Trump does not have the support he would have hoped for.
“He’s also gotten pushback from Republicans on some matters, when he sees his GOP base is not with him,” he said.
“He also has responded in the past to the financial markets not going well.”
But predicting the president’s next move is a “fool’s errand”, Mondschein said.
The ASX 200 is down 1.71 per cent and counting an hour after the markets opened.
Meanwhile, the price of oil continues to skyrocket as Iran threatens oil tankers in the Strait of Hormuz.
The Dow Jones had another bad day, as did the S&P 500 and the Nasdaq Composite.
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