A Trump-driven sell-off usually does not last very long in a straight line. Historically, it tends to follow a familiar rhythm:
1) How long does a Trump headline sell-off typically last?
Base case: 1 to 5 trading days of sharp risk-off, then a rebound attempt.
Why it often fades quickly:
Markets “price the threat” first, then wait for walk-backs, exemptions, delays, or negotiations
Businesses and allies push back fast behind the scenes
Traders fade extremes once positioning gets crowded
If escalation continues (new tariffs, retaliation, no off-ramp language), it can extend to 2 to 4 weeks, but usually with bounces in between.
2) The pattern: shock → pressure test → “relief rally”
Most Trump-driven macro shocks trade like this:
Initial shock (Day 0 to Day 2)
Equities down, VIX up, gold up, defensive USD bid.
Market pressure test (Day 3 to Day 7)
People ask: “Is this real policy or negotiating leverage?”
TACO / off-ramp (Week 2)
Some version of “talks are going well”, “delayed”, “targeted”, “exemptions”, “case-by-case”.
3) When does “TACO” happen: before markets break, or after?
Most of the time: BEFORE markets truly break.
Trump’s playbook tends to be:
Start with a maximalist threat
Watch the reaction (markets, allies, business lobby)
Then pivot to negotiation framing once the pressure is felt
He usually “TACO’s” when:
Equities slide enough to dominate headlines
Bond yields rise enough to tighten conditions
Big corporates start complaining loudly
Allies threaten retaliation in a way that hits US exporters
The key trigger is not just stocks falling
It is financial conditions tightening:
10Y yields rising + stocks falling is the toxic combo
(because it hits valuations and growth expectations)
If credit spreads widen or funding stress appears, the “walk-back” tends to come faster
4) So what is the likely timing this time?
Given your setup (tariffs + threat escalation + yields up + equities down):
My base case
TACO within 3 to 10 trading days, before a deeper break.
If he waits longer (more stubborn scenario)
2 to 4 weeks, but only if:
EU retaliates slowly
US data stays strong enough to absorb it
Markets stabilise on their own
If markets break hard (disorderly scenario)
Then the “TACO” comes immediately after the break, often within 24 to 72 hours, because the political cost becomes too high.
5) What would tell you the sell-off is “done”?
Watch for any of these:
“Negotiations are progressing” language
“Tariffs may be delayed” / “review period”
“Exemptions for certain goods/countries”
Officials contradicting the most aggressive framing
Equities stop falling even on bad headlines (seller exhaustion)
Bottom line
A Trump-driven sell-off is usually short, sharp, and reversible unless it turns into a real trade war with retaliation. Based on past behaviour, I’d expect a “TACO” before markets truly break, likely within 1 to 2 weeks, and often sooner if the bond market keeps tightening conditions.
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