GM. This is Milk Road Macro, the macro newsletter that’s like watching someone toggle the tariff switch on and off… while your portfolio tries not to spill its coffee.
Here’s what we’ve got for you today:
- ✍️ What in the world has happened over the past few days?
- 🎙️ The Milk Road Macro Show: “You Will Own Nothing” Wasn’t a Warning... It Was the Plan w/ Carol Roth.
- 🍪 NATO head said Trump is right about security in the Arctic.
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Prices as of 10:00 a.m. ET.
WHAT IN THE WORLD HAS HAPPENED OVER THE PAST FEW DAYS?
It’s been a rollercoaster ride for markets this week.
First, tariffs are on.
Then, tariffs are off.
Risk asset markets plunged and then largely recovered.
It was a classic of the genre - a Trump “problem → solution” sending markets whipsawing.
But, there was another factor negatively affecting risk asset markets globally.
On the other side of the world, Japan’s bond market was blowing up…
So what in the world has happened over the past few days?
And what might happen next?
Let’s take a look…
1. Problem
First - the problem.
Over the weekend, President Trump revealed that he wanted control over Greenland - and announced new tariffs on eight European nations would be in place until a deal could be reached.
And market action on Tuesday echoed what we saw in April 2025 during the previous tariff tumult surrounding “Liberation Day”.
The key here is that we saw the worst possible combination for U.S. assets - the stock market, the bond market and the currency all selling off strongly at the same time.
This environment generally indicates a flight of capital out of the country.
This dynamic is seen often in emerging market economies - and is not something you would generally associate with the U.S.
The cross-asset decline on Tuesday was the largest since April last year, according to Bloomberg.
This got the world talking about the “Sell America” trade once again - just like in April 2025.
This may be true in the very short-term.
But it wasn't true for very long last year - with capital flooding back into the U.S. in short order after the swift tariff u-turn following “Liberation Day”.
2. Solution
Then, just days later - the solution.
On Wednesday, Trump revealed he would refrain from imposing tariffs on European nations, citing a “framework of a future deal” he said was reached after talks with NATO chief Mark Rutte.
There was an instant sigh of relief from risk asset markets - as stocks and crypto shot higher again.
Still, Trump didn’t detail the parameters of the so-called “framework” and it was unclear what the agreement entails, especially since Denmark had earlier ruled out negotiations over ceding the semi-autonomous island to the U.S..
In an interview with CNBC, Trump said he had not spoken directly with officials in Denmark about his “concepts of a plan” for Greenland, but added that he assumed Rutte had briefed leaders there.
He also said the U.S. would be “involved” in Greenland’s mineral rights, without elaborating.
The New York Times reports that the announcement followed a NATO meeting on Wednesday "where top military officers from the alliance’s member states discussed a compromise in which Denmark would give the U.S. sovereignty over small pockets of Greenlandic land where the U.S. could build military bases”.
There’s still a lot that is unknown about this “deal” - but the tariff truce and lifting of tensions have significantly eased market pressures.
Bob Michelle, CIO at JP Morgan, said the sell-off in markets was a message to the Trump administration to take action to restore calm, as officials did after Liberation Day tariffs rattled investors last year.
He said:
“Things are a bit chaotic and the markets do feel a bit panicked. The market had a fit in April and then they backed off of a lot of things and then calm ensued. We need to hear some of the same kinds of things.”
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WHAT IN THE WORLD HAS HAPPENED OVER THE PAST FEW DAYS? (P2)
But wait…
There was another factor affecting the global risk asset sell-off on Tuesday.
The Japanese bond market was falling apart.
New Prime Minister Sanae Takaichi is adamant on firing a big fiscal bazooka.
And she announced big spending plans, including tax cuts and fiscal stimulus, without properly addressing how they’ll be paid for.
Things then got particularly wild as traders reacted to the new spending plans by selling off Japanese government bonds, causing the yield to spike aggressively higher.
"Trading action was crazy. A 27 basis point move in yields is wild - markets were so dislocated" said Gerald Gan, chief investment officer at Reed Capital Partners in Singapore.
But why should we care about what happens in the Japanese bond market?
The issue here is that global bond markets don’t live in isolation - big moves in one market can often push around yields elsewhere.
And the high-speed Japanese bond implosion contributed to pushing up yields globally, including in the U.S.
U.S. Treasury bond volatility (MOVE Index) spiked higher on the day.
Rapidly rising yields and surging bond volatility are destabilizing to risk asset markets like stocks and crypto.
Here you can see the MOVE Index inverted and overlaid with the S&P 500.
In a note, Goldman Sachs Managing Director of Macro Sales, Nimita Bhargava, wrote:
“The market is de-risking because Japan is no longer anchoring global duration and the spillover to U.S. yields (also led by fragile sentiment around U.S. policy/institutions) is a real problem. Though having said that, many flag that this is a positioning-driven shock amplified by rising global yields, not a structural macro break.”
You know something is a big issue when policymakers start talking about it.
And U.S. Treasury Secretary Scott Bessent revealed he has spoken with Japan.
Bessent said:
“I’ve been in touch with my economic counterpart in Japan, and I am sure that they will begin saying the things that will calm the market down.”
As the meltdown intensified, Japan’s second-largest bank revealed plans to increase its government bond portfolio by as much as double the current holdings.
Whether this actually happens or not is another question, but simply saying it has soothed the bond implosion for now.
Wrapping up
Both the Greenland tariff concerns and the Japanese bond meltdown appear to have eased - at least for now.
Neither issue seems conclusively “solved” at this point - but risk asset markets are breathing a sigh of relief.
However, taking a wider view, both of these problems are likely just short-term noise - and don’t affect the strong fundamentals surrounding the U.S. economy in 2026.
As I’ve been writing about for some time, we’re likely heading into a “Goldilocks” economic regime - and once these short-term issues fade away, markets can concentrate on the strong macro fundamentals.
That’s it for this edition - catch you in the next one.
YOU WILL OWN NOTHING? THE PLAN 🧠
In today’s episode, we sat down with Carol Roth to talk about how the “you will own nothing and be happy” narrative reflects deeper, policy driven forces shaping affordability, inflation, and ownership.
Here’s what you’ll hear:
- Why the affordability crisis is structural, rooted in fiscal policy, financialization, and government intervention.
- How deficits, debt, and market dependence limit what the Fed and policymakers can realistically do.
- The risks of inflationary backstops like yield control and what capital flight could trigger.
- Carol Roth’s barbell approach to investing, hedging, and watching bond market warning signs.
Don’t sleep on this one 👇
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BITE-SIZED COOKIES FOR THE ROAD 🍪
NATO head Mark Rutte said Trump is right about security in the Arctic. “We need to defend the Arctic - we know that the sea lanes are opening up,” he said.
U.S. Supreme Court justices are skeptical of the Trump administration’s arguments for firing Fed Governor Lisa Cook. Trump fired Cook, claiming she had committed mortgage fraud - but she denies any wrongdoing.
Q4 earnings season is well underway - with the first big tech names reporting results this week. AI will lead the conversation - but questions remain over how companies are monetizing their vast investments and whether hyperscalers will continue to increase spending.
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