One might’ve assumed this would be a damage control week for The White House.

After all — and notwithstanding a harried advance for equities — last week was a veritable disaster for the Trump administration, and particularly for Scott Bessent, who very nearly lost the US long-end.

Alas, the administration went out of its way Sunday to downplay tariff exemptions for consumer electronics, suggesting Trump’s uncomfortable with the notion that he caved to markets. Stocks were probably set to extend gains on the back of the exemptions, and they may yet. But… well, here’s Trump:

NOBODY is getting “off the hook” for the unfair Trade Balances, and Non Monetary Tariff Barriers, that other Countries have used against us, especially not China which, by far, treats us the worst! There was no Tariff “exception” announced on Friday. These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff “bucket.” The Fake News knows this, but refuses to report it. We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations. What has been exposed is that we need to make products in the United States, and that we will not be held hostage by other Countries, especially hostile trading Nations like China, which will do everything within its power to disrespect the American People. We also cannot let them continue to abuse us on Trade, like they have for decades, THOSE DAYS ARE OVER!

So, maybe no damage control after all. That aside, I’d still expect markets to trade better than they would’ve were it not for the exceptions. Excuse me. For the non-exceptions.

Trump needs to be careful. Treasurys are coming off one of their worst weeks on record, and the dollar’s in crisis. By all accounts, there’s a buyers’ strike for US assets indicative of the extensive damage Trump’s done already to America’s anyway blighted reputation.

The figure below, from BofA, uses EPFR’s data to proxy foreign-selling of US equities. It was $6.5 billion over the five-session stretch which began April 2 or, more to the point, in the days following “Liberation Day.”

Foreigners sold $3 billion of US corporate bonds over the same period.

Some corners of Wall Street remain reluctant to say it out loud, but there were a fair number of explicit warnings in recent days about the extent to which Trump’s policies and the erratic nature of the tariff rollout risk irreparable damage to, for example, Treasurys’ reputation as a haven asset.

Bloomberg riffed on my “science fiction” scenario piece, and there’s a palpable sense of alarm about accelerated de-dollarization. Deutsche Bank lamented “the end of an era,” BofA described “a liquidation cycle of higher US yields, lower stocks and a lower USD.” And on and on.

You can pretend this isn’t happening the same way you can pretend America isn’t losing its democracy the same way you can pretend climate change isn’t real, but denying reality ain’t gonna save you from the wildfires.

Trump would do well to make this a good week for stocks and bonds, and he could. All he has to do is shut up about the tariffs for a few days. The figure below, from BMO’s Ian Lyngen, gives you some context for deteriorating liquidity in Treasurys.

That’s the bid-ask on the long bond. In absolute terms, we’re not at levels which “demand” Fed intervention, per se, but that simple metric underscores an equally simple point: Bessent does have a problem.

“The one-week moving-average of the bid-ask spread in the long bond surged to 0.562bps as of April 11, the widest since March 2023, and nearly triple the 2024 average of 0.19bps,” Lyngen remarked. “Using this general proxy, liquidity in the long-end has certainly gotten worse amid the tariff turmoil.”

If this is where it stops, things might be ok, but Trump’s not famous for knowing when enough’s enough. Although the ex-China 90-day “pause” and the temporary exemption for consumer electronics suggest he’s reached his pain threshold in the near-term, Trump has an incurable penchant for dialing up the tension as soon as things calm down. Some say that’s “the art of the deal.” I say it’s a compulsion.

The data docket in the US this week includes retail sales (seen posting a very sharp, 1.5% advance), builder sentiment, housing starts and, on Monday, the New York Fed’s consumer poll, which’ll be eyed closely for (more) evidence that household inflation expectations are coming unglued. Jerome Powell will speak mid-week at an event hosted by the Economic Club of Chicago.