Recession noises seem to be getting louder which partly explains why 10-year treasury yields have dropped by more than half a percentage point since president Donald Trump was inaugurated in the middle of January.

Trump has further stoked concerns as he failed to dispel recession fears, saying the economy was entering a ‘period of transition’. The Trump administration is warning of short-term pain on the path to a ‘Golden Age’ while treasury secretary Scott Bessent has said the economy needs to ‘detox’.

In response US stocks fell hard on 10 March driven by a 4% drop in the technology-heavy Nasdaq 100, its worst one-day fall since 2022. The index has now entered correction territory, falling more than 10% from the peak.

The benchmark S&P 500 index has given back all the gains it made since the election and sits more than 8% below its recent peak. Meanwhile the so-called Magnificent Seven stocks have entered bear-market territory after losing 20% of their value since the end of 2024.

Electric vehicle maker Telsa (TSLA:NASDAQ) has slumped by around 40% and AI darling Nvidia (NVDA:NASDAQ) has lost a fifth of its value from the recent peak.

Airline stocks were weaker after Delta Airlines (DAL:NYSE) slashed its quarterly revenue and profit outlooks citing weaker domestic demand.

CEO Ed Bastian told CNBC that the outlook has been impacted by the recent reduction in consumer and corporate confidence, caused by macro uncertainty.

Delta shares fell 11% in aftermarket trading, dragging down American Airlines (AAL:NASDAQ) by 6% and United Airlines (UAL:NASDAQ) by 9%.

The so-called fear index, VIX, has spiked to 22 reflecting expectations for increased daily volatility. Digital currencies have taken a bath with bitcoin losing more than 3%, taking losses to a 26% since January.

The bearish reaction spilled over into Asian markets with the Asia-Pacific excluding Japan index slumping more nearly 2% before recovering slightly in early trading, as a modicum of calm returned.

Safe haven assets such as the Japanese yen and Swiss franc were in demand with the yen touching a five-month high against the US dollar.

Uncertainty has been stirred by Trump’s tariff polices which seem to be dampening sentiment and causing businesses to postpone investment decisions.

Economist Michale Gapen at Morgan Stanley believes the economy will avoid a recession while acknowledging ‘policy implementation and front-loaded policy uncertainty push recession risks higher’.

Goldman Sachs reduced its 2025 GDP forecast to 1.7% from 2.2% on 7 March as it sees larger tariffs impacting disposable income and consumer spending while increasing uncertainty for businesses.

The investment bank increased its probability of recession to 20% from 15%, a relatively small amount because ‘the White House has the option to pull back if the downside risks begin to look more serious.’

Meanwhile, the US Federal Reserve looks set to keep its powder dry with the latest reading of the labour market showing resilience and inflation remaining above target.

Market implied interest rates suggest one interest rate cut in June and two further cuts by the end of the year.

Bank of America’s Shruti Mishra is in the camp that argues the Fed will not cut rates further with inflation above target. The question is, will falling stock prices force the central bank’s hand?

There is a record amount of household wealth tied up in equities according to data from the Federal Reserve, which means a large fall in prices could impact consumer spending.