As Trump tempered his rhetoric on tariffs, the dollar weakened against major currencies. On one measure, the greenback looked poised for its biggest weekly slide since November 2023, marking the worst performance at the start of a presidential term since at least the 1970s.

Emerging market currencies were among the biggest gainers against the dollar, with the Colombian peso, Hungarian florin and Polish zloty all advancing more than 3%. The bet: The White House will deploy trade threats primarily as a negotiating tool, at least for now, to extract concessions from countries.

US Treasuries were a rare quiet corner in the markets. After coming under fire in recent weeks on concerns that the new administration’s agenda will increase government borrowing and stoke inflation, bonds posted the smallest of gains. The yield on 10-year notes was little changed from a week ago, marking the smallest move since September.

Of course, everything under Trump can change as fast as he can hack a tweet. The sweep of the administration’s agenda — lower taxes, sweeping deregulation, immigration crackdowns and more — adds an extra layer of uncertainty for the inflation-obsessed market. And the competing goals inherent in the agenda are confusing investors. A mass deportation of undocumented immigrants, for example, would clash with the goals of boosting economic growth without fueling inflation.

“You still have the conundrum of how you triangulate everything that Trump wants,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “You want lower inflation, but you want tariffs, how do you do that? You want a weaker dollar, but you want tariffs. It’s going to be very difficult to get all three at once and the market is still waiting to see which one prevails.”

While volatility was broadly lower in stocks and bonds in the first week, a host of assets took a hit from Trump’s remarks, from the dollar to commodities. Crude prices fell instantly on Thursday, after Trump sent the market lower, telling world leaders gathered in Davos, Switzerland, that he would ask Saudi Arabia and other OPEC nations to “bring down the cost of oil “.

However, while it’s tempting to cite the White House as a driver of market moves, there are still larger forces at play. Not least is a US economy that refuses to slow down as corporate earnings beat analysts’ estimates again.

Still, if Trump’s first term is any guide, reading too much into the early days of his presidency is a mistake. In 2017, Treasuries fell while US stocks trailed their foreign counterparts at the start, only to reverse at the end of their tenure. Trump may still push for another defeat next week, when more executive orders arrive in an already packed trading period between the Federal Reserve’s policy meeting and Big Tech’s earnings season.

But if there’s one thing to be said about the early trading sessions, it’s this: Investors are betting that their tax-cut commander-in-chief will be a friend of Corporate America and, perhaps, less of an enemy of foreign companies than he’s been led to believe. they imagined

David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, notes that Trump won the election last year largely because Americans were burned by rising inflation that had little impact after the Biden administration took office. That makes the president wary of imposing tariffs, he wrote in a memo. “Policies that fuel even higher prices will not be politically popular.”

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