Safety, export markets and oil as drivers - Commerzbank

Much has happened since the US 'Liberation Day' on 2 April. Tariffs have been introduced, only to be partially suspended. Negotiations have begun, though seemingly without much prospect of success. And new tariffs are already being planned. Of course, all this has not left the markets unscathed. The Nasdaq is down around 5% since 2 April. Meanwhile, the yield on 10-year US Treasuries has risen by around 20 basis points over the same period, while the yield on Bunds with the same maturity has fallen by around 20 basis points, Commerzbank's FX analyst Volkmar Baur notes.

The market seems to be reacting rationally to the 'Liberation Day'

"Most of the exchange rate movements can be explained relatively easily by global developments. The main winners have been the safe havens of the Swiss franc and the Japanese yen, as might be expected in times of heightened uncertainty. The franc has risen significantly more because Japan is more dependent on the US economy."

"Next is the euro, which is benefiting from the fact that German government bonds offer an alternative to US Treasuries when investors are looking for safe government bonds and, of course, from the significant fall in oil prices which benefits its external balance. The strength of the euro also explains the positive performance of Eastern European currencies, which are more closely linked to the single currency than to the US dollar."

"All in all, the market seems to be differentiating rationally. It would therefore be wrong to speak of panic, at least when looking at the last 14 days as a whole. However, this should not hide the fact that the changes shown below are significant for a period of just 2 weeks. And this US administration is certainly in for more surprises."