• Treasury Secretary Scott Bessent denied that chaos in the bond market over the deleveraging of so-called basis trades forced President Trump into putting his global trade tariffs on pause for 90 days. Rather, Bessent said, this was Trump’s plan all along.

Treasury Secretary Scott Bessent denied Wednesday that bond market volatility had forced the president into putting a 90-day pause on most trade tariffs.

Following President Trump’s announcement that most of the tariffs he’d planned for U.S. trade partners would now not go into effect pending further negotiations, Bessent was asked by reporters at the White House whether a shocking rise in bond yields that sparked fears about a liquidity crisis and questions about whether Treasuries were losing their safe-haven status had pushed Trump into the partial retreat.

“This was driven by the president’s strategy,” the Treasury secretary said. “He and I had a long talk on Sunday, and this was his strategy all along.”

Stocks jumped after Trump announced the 90-day pause, in which most countries (except China) will be moved back to a baseline 10% tax on imports.

“This was the news we and everyone on the Street [were] waiting for as the pressure on Trump took on a life of its own,” Dan Ives and Sam Brandeis of Wedbush Securities wrote in a note Wednesday afternoon. “And the eye-popping rise of the 10-year yield was ultimately too much to hold his line on the self-inflicted Armageddon tariff unleashed at midnight. Now we would expect massive negotiations across the board over the coming months including China being front and center as the biggest wild card.”

Earlier, Bessent claimed that the bond market would calm down as highly leveraged bond trades unwound. He also noted that this type of deleveraging was normal and expected.

A select group of hedge funds profit handsomely from the so-called basis trade, which involves heavy borrowing to take advantage of tiny price discrepancies between Treasuries and futures linked to those bonds. Typically, this helps keep money markets humming. When the $1 trillion trade unwinds, however, yields surge as the market struggles to absorb a massive increase in the supply of Treasuries.

In an interview with Fox Business, Bessent said he’s seen a similar story play out many times during his hedge fund career.

“There’s one of these deleveraging convulsions that’s going on right now in the markets,” he said. “It’s in the fixed-income market. There are some very large leverage players who are experiencing losses that are having to deleverage.”

Investors initially piled into Treasuries last week as the stock market plunged after President Donald Trump unveiled sweeping “reciprocal tariffs,” which went into effect Wednesday morning. Early Monday, the yield on the benchmark 10-year Treasury note fell below 4% for the first time since October, down from about 4.8% in early January. A fixed-income selloff soon followed, however, and the 10-year yield—which rises as the price of the bond falls—surged above 4.5% Wednesday morning before retreating near the 4.4% mark as a successful Treasury auction eased concerns about demand for U.S. debt, per CNBC.

Bessent addressed concerns about chaos in fixed income by saying, “I believe that there is nothing systemic about this. I think that it is an uncomfortable but normal deleveraging that’s going on in the bond market.”

Basis trade could impact mortgages, car loans 

Market watchers have cited many possible reasons for the confusing selloff in bonds. As trade policy uncertainty reigns, investors could be desperate to simply hold cash, similar to the onset of the COVID-19 pandemic. Traders are struggling to price in how the Federal Reserve could react if a global trade war induces dreaded stagflation—rising inflation coupled with slowing growth. There’s a chance China and other foreign holders of U.S. debt are flooding the market with Treasuries to retaliate against Trump’s tariffs.

Evaluating all those explanations relies on circumstantial evidence of what’s going in markets, Torsten Sløk, chief economist at private equity giant Apollo, told Fortune on Tuesday.

Still, he thinks the basis trade is a likely culprit. For hedge funds to profit significantly on the tiny arbitrage opportunity, they need to do a lot of borrowing. According to the Financial Times, they might take as much as 50- to 100-times leverage, meaning $10 million in capital, for example, could support $1 billion of Treasury purchases.

During periods of extreme volatility, however, that leaves hedge funds vulnerable to margin calls from broker-dealers, Sløk noted.

“It is very, very unusual that you have long-term interest rates going up when the stock market is going down,” he said. “That’s telling me that there [are] some distressed, forced sellers out there.”

This is a concern, Sløk said, because long-term Treasury yields, particularly the 10-year, are the basis for mortgage rates, car loans, and other types of common borrowing costs throughout the economy.

“You don’t want long-term rates to go up for non-economic reasons,” he said.

To prevent that during the early days of the pandemic, the Federal Reserve had to buy $1.6 trillion in Treasuries over the course of several weeks. The central bank also temporarily loosened bank capital requirements instituted after the Global Financial Crisis. Exempting Treasuries and bank reserves from the so-called supplementary leverage ratio enabled lenders to buy more U.S. debt.

While insisting the market will steady as hedge funds de-risk, Bessent indicated Wednesday he wanted to make that change permanent as part of a broader deregulatory push.

Update: This story was updated with a longer version of a quote from Treasury Secretary Scott Bessent after President Donald Trump’s announcement of a 90-day pause on reciprocal tariffs, as well as commentary from a note written by Dan Ives and Sam Brandeis of Wedbush Securities.

This story was originally featured on Fortune.com

The U.S. is heading into a workforce crisis—accelerated by AI, compounded by tariffs, and amplified by economic volatility. 

The disruption is no longer theoretical: Tariffs are rattling markets, choking supply chains, and injecting uncertainty into investment decisions. 

But beneath the headlines is a more foundational issue: America still hasn’t built the workforce it needs to withstand these shocks.

Artificial intelligence is reshaping white-collar work faster than expected. Junior analysts, paralegals, and customer service reps are being quietly replaced by algorithms that don’t sleep or take sick days. We once worried about robots on factory floors. Now it’s bots in offices—and there’s still no clear plan to upskill the next generation.

At the same time, a wave of federally backed investments is transforming the job landscape. The CHIPS and Science Act and Build Back Better infrastructure programs are generating thousands of new roles in clean energy, broadband, and semiconductor manufacturing. These aren’t theoretical jobs—they’re shovel-ready and funded through 2025 and beyond. But the talent pipeline hasn’t caught up. What was once a looming skills gap is now a daily operational challenge.

In Arizona, the $40 billion investment by Taiwan Semiconductor Manufacturing Company (TSMC) is expected to create thousands of high-paying jobs—but local community colleges are scrambling to spin up advanced manufacturing programs fast enough to meet demand. In Michigan, automakers transitioning to EV production are bumping up against shortages of battery tech specialists and software-savvy technicians—positions that didn’t exist in volume even five years ago. And, in North Carolina, where Apple and Toyota are building massive new campuses, employers are already expressing concern about the shortage of engineers, electricians, and fiber-optic specialists needed to sustain long-term growth.

Tariffs uncertainty

Ironically, tariffs designed to protect American manufacturing may be exposing its weakest link. Major employers rely on an ecosystem of small and midsize suppliers—machine shops, logistics firms, parts manufacturers—that are often less equipped to compete for talent. 

Without the name recognition, salaries, or benefits of headline companies, these firms struggle to staff up. When they can’t, the whole supply chain stalls. 

Add tariff-driven cost hikes and procurement uncertainty, and expansion plans start to falter just when they should be accelerating.

Take Ohio, where Intel is investing more than $20 billion in what it calls the “Silicon Heartland.” The company has made clear that without a robust pipeline of skilled tradespeople—welders, precision machinists, tool-and-die makers—none of the advanced fabs will function at capacity. Local training centers are working overtime, but demand is outpacing capacity. In Louisiana and Texas, where the energy sector is building out next-gen hydrogen and carbon capture facilities, employers can’t find enough instrumentation and control technicians—a job critical to safe plant operation, but one that few young workers even know exists.

Rethinking education

Meanwhile, the U.S. may be on the verge of transforming education policy as we know it. As calls to dismantle or decentralize the U.S. Department of Education grow louder, states are stepping into the spotlight. With 39 states now under single-party control—a modern record—governors have an opening for rethinking education from the ground up without many political speedbumps to slow their educational policy reforms.

This is more than political convenience. It’s strategic alignment. Education secretaries may focus on test scores, and their commerce counterparts on job creation. But they both report to the same boss: governors. The latter want wins they can tout, like landing major employers. That only happens when states can deliver a skilled labor force on demand. Education and economic development aren’t separate lanes—they’re the same highway. Governors are in a unique position to unify those efforts and innovate where Washington can’t.

Careers development that works

There are models worth studying. Switzerland, for instance, sends about two-thirds of high school students into vocational programs that combine classroom learning with apprenticeships. The result: low youth unemployment and a highly adaptable labor force.

In the U.S., scalable examples are emerging. In Pennsylvania, MedCerts has partnered with the University of Pittsburgh Medical Center to launch health-care career programs that blend online, skills-based training with on-site clinical experience. It’s fast, practical, and leads directly to jobs. In high schools across multiple states, MedCerts is also stepping in where traditional Career and Technical Education (CTE) programs fall short—especially in rural areas. Their model uses online curriculum and employer-led instruction to fill staffing gaps and create low-cost, scalable training pipelines.

Other localized programs are stepping up. In Georgia, the Technical College System has launched rapid credentialing programs aligned with regional employers in logistics and manufacturing. In California, high schools in the Central Valley are working directly with agri-tech companies to train students in drone operation and precision agriculture—responding to an aging farm workforce and rising tech needs.

This is what modern workforce development should look like: nimble, employer-connected, and outcomes-focused.

To compete globally, the U.S. needs to reimagine high school. Career and technical education (CTE) must be treated not as a fallback, but as a parallel path equal to college prep. 

We also need better data. Today, most schools lose touch with students the moment their district email is deactivated. Without longitudinal tracking, we can’t measure impact—or improve what’s broken. 

We’re at a critical junction. AI is disrupting jobs faster than policymakers can respond. Tariffs are destabilizing supply chains just as industries try to rebuild. And our education system is still preparing students for a labor market that no longer exists.

The solution isn’t top-down—it’s ground-up. State leaders, employers, and educators must collaborate to modernize workforce readiness—before the next disruption hits.

Programs like MedCerts and UPMC offer a blueprint. So do the workforce experiments happening in Arizona, Ohio, Georgia, and beyond. 

Now it’s time to scale them—and treat workforce development not as a policy afterthought, but as a national priority.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

Read more:

• AI’s job boom? Not before the bust
• I’ve spent decades building tech that changes how we work. Here’s why AI agents won’t take your job
• Ex-Trump official: H-1B visa system is proof that America’s schools need radical transformation
• I’ve spent years helping female founders access capital. Now that they have AI, they might not need to

This story was originally featured on Fortune.com

• President Trump smashed the pause button on some of his tariffs before big banks careened into a head-to-head with analysts about their earnings guidance on Friday. The president’s announcement on social media had an immediate impact on markets, with the Nasdaq ending the day up 12%, while the S&P 500 rose more than 9%. Individual stocks climbed: Delta Air Lines lifted 23%, Nvidia rose more than 18%, and Apple, which saw more than $770 billion in value evaporate after concerns about the retail price of iPhones, closed the day up 15%.

Stock markets erupted with a torrential surge of optimism following President Donald Trump’s post on Truth Social pausing some of his tariffs, and comments from Treasury Secretary Scott Bessent reassuring the world that the U.S. is not embroiled in a trade war. 

Despite the brief respite from the carnage of the week, though, a chilling uncertainty looms over the next 90 days. 

“Every portfolio manager is trying to figure out whether you can draw a straight line to future negotiations,’” said Jake Schurmeier, portfolio manager at Harbor Capital and a former member of the Federal Reserve Bank of New York’s Markets Group. “We get another 90 days before we have to do this song and dance again.”

To level set: President Trump announced a bevy of tariffs during a Rose Garden address last week that had been telegraphed since his campaign. Investors had priced in tariffs and the subsequent impact on trade policy, but the extent of the tariffs was greater than expected. Markets plummeted in the trading days after Trump’s announcement. The word “recession”—typically avoided at all costs—became a talking point, and the chances of the U.S. stumbling headlong into one rose, according to JPMorgan Chase, whose CEO Jamie Dimon announced publicly that a recession was a “likely outcome” after the tariff tumult. Trump said Dimon’s comments factored into his decision to issue the partial pause on Wednesday.  

Following Trump’s announcement, markets staged a gravity-defying rally, with the Nasdaq ending the day up 12%, while the S&P 500 rose more than 9%. 

Michael Orlando, executive director in the J.P. Morgan Center for Commodities and Energy Management at the University of Colorado Denver, told Fortune the tariff pause is a relief, mostly from uncertainty, which had continued to weigh on equity prices. But the bigger development, which emerged over the weekend, was that U.S. Treasuries “stopped looking like a safe harbor in a time of uncertainty and started looking like a risky bet, themselves,” Orlando said. 

“I think this tariff ‘cooling off’ period did a lot to dispel concerns that maybe the President doesn’t understand the idea of gains from trade,” Orlando added.

But the question remains: What happens next?

‘Ample Air Cover’

First, there’s the consideration as to whether the damage from tariffs will be lasting, along with the cost of pervasive economic uncertainty, said Schurmeier. All the planning around capital expenditures and major strategic moves just got tossed out the window because there is no certainty, he said. 

The portfolio manager noted there will be critical signs to look out for during earnings calls between major companies and analysts this week, particularly regarding how CEOs and CFOs plan to grapple with questions about tariffs—and anything else that might cause disruptions.

“This provides ample air cover to drop any bad news,” said Schurmeier. “Any bad news you have, get it out this quarter.”

Money managers will also be watching to see how big bank leaders, such as Dimon, talk about how their clients are responding, perspective on M&A activity, and guidance about their willingness to provide credit, Schurmeier added. Right now, it’s too early to talk about potential loan losses, but other topics will be indicative about whether there’s stronger business sentiment. 

“Whatever they say will be pretty instructive,” said Schurmeier. 

China: From 104% to 125%

The other major looming issue is China. 

The next few weeks are likely to zero in on the impact of possible further retaliation after China pledged to “fight to end” even before Trump raised tariffs on the country to 125%. Trump countered with no pause on China tariffs, and instead hiked them because of China’s “lack of respect,” the president wrote on social media. 

Idanna Appio, a portfolio manager at First Eagle Investments and former deputy head of the global economic analysis department at the Federal Reserve Bank of New York, said the situation with China is extremely serious, from tariff levels to the potential for a broken trading relationship between the world’s two largest economies. 

It’s unclear if Trump’s latest move will push China toward negotiation on tariffs or if economic tensions will reach such a level that China becomes more confrontational in the geopolitical sphere, Appio said. 

“Given the sharp escalation and the economic friction between the U.S. and China, which is obviously not good for the global economy, does that spillover to the geopolitical side?” she said. “If they feel they have nothing left to lose…does China start to push into other domains? I hope the answer to that is, ‘No.’”

Economic Outlook: ‘Very Tenuous’ 

Beyond what might happen with China, the U.S. economy remains in a “very tenuous place,” Appio said. 

She put a recession into her forecast but Appio said she isn’t sure if she’s removing it at this stage because of looming uncertainty even if tariffs aren’t as large as those initially announced last week. Plus, there’s still room for further tariff action and few uncertainties have been truly eliminated at this stage. 

“One fear I have is that we wind up repeating this whole exercise in 90 days,” said Appio. “It’s been a roller coaster ride, to say the least.”

This story was originally featured on Fortune.com