(We've rebranded Morning Bid Asia as Trading Day to offer you

more in-depth analysis and commentary on global markets. I'll

help you make sense of the key trends moving markets just as the

U.S trading day is ending and Asia's morning is getting

started.)

By Jamie McGeever

ORLANDO, Florida, March 10 (Reuters) - TRADING DAY

Making sense of the forces driving global markets

If this is what U.S. Treasury Secretary Scott Bessent's "detox"

period for the economy looks like, investors are in for a

serious amount of pain.

The Wall Street selloff that has been snowballing recently

on growth and trade war fears resulting from President Donald

Trump's tariffs is turning into an avalanche, with the three

main U.S. indices on Monday sliding between 2% and 4%.

Big tech and big banks were among the biggest decliners, and

the Nasdaq's 4% fall was its steepest in two and a half years.

Bond yields fell sharply and markets are now pricing in a

roughly 50-50 probability of the Fed cutting rates in May. The

Fed meets next week and is widely expected to keep rates on

hold, but more days like this on Wall Street and everything is

on the table.

Markets around the world will feel the whiplash on Tuesday,

with Asian and global indices already reeling from shock figures

from Beijing over the weekend that showed deflationary pressures

in China are intensifying.

U.S. recession fears are rising fast. Even if the Atlanta

Fed's GDPNow model showing deep GDP contraction in the first

quarter proves to be wrong - many analysts have questioned its

inputs - the fog of economic uncertainty is thickening.

Not everything is falling, of course. The price of U.S.

Treasuries jumped again on Monday, and indices of implied

volatility across asset classes are also spiking higher. Indeed,

a perfect storm is brewing that could trigger an even greater

surge in volatility - more on that below.

Today's Key Market Moves.

* Tesla shares plunge 15%, their biggest fall since 2020, as

many

investors give their verdict on CEO Elon Musk's role in Trump's

government and his support of far-right parties in Europe.

* Shares in Microchip Technology and Palantir Technologies

fall

10% as the recoil in U.S. tech gathers momentum.

* Morgan Stanley shares down 6.4%, their biggest fall since

October 2023.

* 10-year Treasury yield falls 10 basis points, its biggest

fall

in a month.

* The dollar index rises just 0.2%, a small but potentially

hugely

significant move as the dollar's failure to rally amid such

widespread market turmoil raises questions about its underlying

appeal.

* Nikkei futures point to 1.7% fall in Japanese stocks at

the open

on Tuesday.

U.S. recession risk the tinder for smoldering market

volatility

Financial market volatility has bubbled up to its highest level

this year thanks to the chaotic implementation of U.S. President

Donald Trump's protectionist trade agenda. While volatility

hasn't boiled over yet, investors would do well to guard against

complacency, because tariff fatigue may push it over the edge.

Implied volatility in the S&P 500 as measured by the VIX

index - Wall Street's so-called fear index - is now the highest

since the Fed cut interest rates in December, a decision markets

interpreted as a mistake at the time. The VIX has almost doubled

in the last month, and on Monday the three-month VIX spiked to

its highest since August.

The 'MOVE' index of implied volatility in the U.S. Treasury

market is also the highest in four months, which is especially

notable as it is accompanying a rally in Treasuries prices

rather than a bond market selloff and rise in yields.

Volatility is still well below levels associated with past

market crises, or even recent episodes like the 2023 U.S.

regional banking panic or Japan's yen carry trade shock last

August. Its recent rise certainly hasn't matched the ongoing

surge in policy uncertainty which, by some measures, has never

been higher.

Analysts at JP Morgan put this suppression of volatility

down to retail investors' willingness to 'buy the dip', which

has provided a "persistent backstop" to equities, the rise of

'passive' equity investing over 'active' management, and the

strength of investor and corporate balance sheets.

They note that since the S&P 500's peak on February 19,

U.S. equity ETFs have only recorded one day of net outflows.

Cumulative inflows over the period have exceeded $30 billion,

which has helped limit the broader market decline.

But based on White House statements over the past few days

and intensifying market ructions, it's possible we're soon going

to see a true spike in volatility as investors start to question

whether 'buying the dip' is such a good idea.

'DETOX' PERIOD

Warnings about further market turbulence are now coming from

on high. U.S. Treasury Secretary Scott Bessent said on Friday

that the economy is entering a "detox" period, and Trump

declined to rule out a recession in an interview with Fox News

broadcast on Sunday.

Trump, who tweeted more than 150 times about the rising

stock market during his first term, also said on Friday that

he's "not even looking at the market" and that there will likely

be some "disruption" as his tariffs are implemented.

He's not wrong there.

The so-called "Trump bump" is long gone. The S&P 500 is

lower than it was before his November 5 election win, and is now

down nearly 10% from last month's high and close to official

correction territory. The Nasdaq is already in a correction, and

has lost 14% in just three weeks after slumping another 4% on

Monday.

And even if recession risks flagged by some GDP models prove

to be unfounded, the economic outlook is still darkening

rapidly. Economists at Morgan Stanley just cut their 2025 GDP

growth forecast to 1.5% from 1.9%, and economists at Goldman

Sachs trimmed theirs to 1.4% from 2.4%.

Economic growth at these below-trend rates is unlikely to

sustain current equity valuations, hence the repricing currently

underway, and the growing tariff fatigue should only exacerbate

this downturn.

Every tariff announcement from Trump moving forward -

whether it's an unveiling, pause or exemption - is likely to be

met with a selloff on Wall Street. If he doesn't pull back,

stocks fall on the feared economic impact; if he does pull back,

stocks fall on the resulting chaos, confusion and uncertainty.

"Trump's leverage credibility with tariffs is quickly

eroding," says Alfonso Peccatiello, chief investment officer at

Palinuro Capital.

The volatility dam has, by and large, held. But pressures

are building. Investors may need to seek cover.

What could move markets tomorrow?

* Japan household spending (January)

* Japan GDP (Q4, revised)

* Auction of $58 bln of U.S. 3-year Treasury notes

* U.S. 'JOLTS' job figures for January

If you have more time to read today, here are a few articles

I recommend to help you make sense of what happened in markets

today.

1. Central banks slip into the shadows

2. Investors flee equities as Trump-driven

uncertainty

sparks economic worry

3. SPECIAL REPORT: Three weeks that changed the

world: How

Trump turned against Ukraine and Europe

4. The Magnificent Seven Monitor - Track the U.S.

technology stocks that dominate the market

I'd love to hear from you, so please reach out to me with

comments at . You can also follow me at [@ReutersJamie and

@reutersjamie.bsky.social.]

Opinions expressed are those of the author. They do not

reflect the views of Reuters News, which, under the Trust

Principles, is committed to integrity, independence, and freedom

from bias.

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(Writing by Jamie McGeever

Editing by Bill Berkrot)