Financial markets experienced extreme volatility as US President Donald Trump’s escalating trade war shook global trade and financial markets. The Monday of April 14 saw a dash-for-cash, as both credits and US Treasuries sold off on tariff uncertainties. Spreads blew wider by 20 to 40 basis points (bps), while high-yield bonds lost 8 to 10 bps on Monday. However, these high-yield papers recovered in the next few sessions, as Trump enacted a flat 10% reciprocal tariff for 90 days. Volatility persisted as the US and China continued their tit-for-tat tariff escalation, although the market continued to grind tighter. Sovereign bonds from the Republic of the Philippines and Indonesia generally outperformed the Asia investment-grade space on strong support from local accounts. Moreover, Philippine corporate spreads remained steady. Overall, spreads broadly closed out the week 10 to 20 bps tighter on quality issuers, but some riskier lines remained 20 to 30 bps wider. US Treasuries sold-off by 10 to 15 bps, with the 30-year US Treasury briefly touching 5% before reversing course.

• The US Consumer Price Index printed lower than expected at 2.4% versus a market estimate of 2.5% year-on-year.
• The US Unemployment Claims was as expected at 223,000 week-on-week.
• The US Producer Price Index printed lower than expected at -0.4% versus a market estimate of -0.2% month-on-month.