Maybe it's partly to do with the Bastille Day holiday in France and also a delayed start to the week's heavy events calendar, but Trump's weekend plan to hit European Union and Mexican imports with a 30% tariff from next month saw the euro and euro zone stocks tick only modestly lower on Monday.
As with the sweep of other August 1 tariff plans that Trump detailed in letters sent last week, investors suspect much may change between now and then and are reluctant to take the standing numbers at face value just yet.
What's more, there's still no real consensus on whether the U.S. trade war damages the American economy more or less than any of the countries it's targetting. And in currency markets, the dollar has been the one unequivocal loser from the whole policy piece this year so far.
The EU said on Sunday it would extend its suspension of countermeasures to U.S. tariffs until early August and continue to press for a negotiated settlement. But the bloc refuses to roll over and Italy's Foreign Minister, Antonio Tajani, said the EU has already prepared a list of tariffs worth more than 21 billion euros on U.S. goods, if the sides fail to reach a deal.
EU trade commissioner Maros Sefcovic said that even though the EU wants a favorable agreement, it was preparing possible countermeasures. Commission President Ursula von der Leyen said on Sunday that the bloc's more draconian retaliatory tool, the so-called "Anti Coercion Instrument" was created for extraordinary situations and "we are not there yet."
European stocks slipped about 0.5% on Monday, with the euro virtually unchanged from Friday's close just under $1.17. Even euro auto sector stocks, in the frontline of a U.S. tariff squeeze, were only down just over 1%.
There were bigger reactions in long-dated government bonds, however. German benchmark yields pushed to their highest since April 1 and 30-year yields hit their highest since October 2023.
The move in debt yields was hard to pin on the trade situation, even if the heightened fears of a tit-for-tat trade war may prove inflationary - and even stagflationary - for all.
Despite the holiday, traders eyed French President Emmanuel Macron's announced plans to push forward defence spending with an already strapped budget - pledging to double the military budget by 2027, three years earlier than originally planned.
But the fresh backup in long-dated debt yields was more global, with Japan's 10 and 30 year government borrowing rates hitting their highest since May on Monday on a mix of domestic political and fiscal nerves ahead of upper house elections on July 20.
More broadly, the widening bond selloff may owe as much to worries about the mounting attacks from the Trump administration on the Fed and its chair, Powell.
Even though Trump has previously said he won't fire Powell before his term expires early next year, his attacks on the Fed boss are now almost daily and have shifted in tone toward accusations of mismanagement as much as distaste for the monetary policy stance.
White House economic adviser Kevin Hassett, seen by some as one possible contender to replace Powell, said Trump had the authority to fire Powell "if there's cause", and the Fed "has a lot to answer for" on renovation cost overruns at its Washington headquarters.
Hassett told ABC's "This Week" program that any decision by Trump to try to fire Powell over what the Trump administration calls a $700 million cost overrun "is going to depend a lot on the answers that we get to the questions that (budget director)Russ Vought sent to the Fed."
Investors fear for Fed independence given Trump is seeking rate cuts of up to three percentage points even with inflation and inflation expectations well above the central bank's target.
With the immigration crackdown potentially upping risks of another worker shortage and higher wages, the tension on that score is unnerving bond markets.
Thirty-year Treasury yields hit their highest in more than a month - within 2 basis points of the 5% threshold. Wall Street stock futures were in the red again after a down day for the main indexes on Friday. The dollar index was a shade firmer.
Tuesday sees the release of June U.S. consumer price inflation data that will give some indication of whether the limited amounts of tariffs that have hit to date are starting feeding household cost of living more broadly.
Crude oil prices rose on Monday and reached their highest level in three weeks as investors eyed further U.S. sanctions on Russia that may affect global supplies.
What's clear is that tariffs are flattering Federal budget revenues already, with a surprise surplus seen in June.
The second-quarter corporate earnings season also kicks into gear on Tuesday, with updates from the big banks.
Elsewhere, Chinese stocks and the yuan were firmer as China's exports regained momentum in June, with firms rushing orders to capitalise on a fragile tariff truce between Beijing and Washington ahead of this month's latest deadlines.
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