Amid mixed messages from the Trump administration on the direction of its trade war, markets notched a second day of gains as investors appeared to be betting Donald Trump is looking for a way to back down a bit, given the damage done to equities, bonds and global confidence in the US economy.

Since raising tariffs on China to triple digits, Trump has repeatedly called on Beijing to negotiate while President Xi Jinping has, at least publicly, declined the invitations. The US president recently doubled down, pledging that China was “going to do fine” in any negotiation and that there’s no reason to “play hardball.” But on Wednesday, Treasury Secretary Scott Bessent re-muddied the waters, saying Trump hasn’t offered to lower tariffs on China unilaterally.

Still, long-maturity Treasury yields fell as Trump retreated from his threats to fire Fed Chair Jerome Powell (which may not be legal anyway). The yen slid as Bessent said America won’t be pursuing specific exchange-rate targets in its talks with Japan. Bitcoin jumped while haven trades like gold pushed lower.

Nevertheless, it’s still a grim market, economists are still predicting recession and lawsuits alleging Trump’s tariffs are illegal in the first place continue to pile up. On Wednesday, a dozen US states filed a claim in the US Court of International Trade alleging the Republican illegally bypassed Congress by issuing the duties under an emergency economic law.

“The president does not have the power to raise taxes on a whim, but that’s exactly what President Trump has been doing with these tariffs,” New York Attorney General Letitia James said in a statement. “Donald Trump promised that he would lower prices and ease the cost of living, but these illegal tariffs will have the exact opposite effect on American families.” —David E. Rovella

Listen to Bloomberg’s weekly podcast on the intersection of politics and economics during the second presidential term of Donald Trump.

What You Need to Know Today

Citadel founder Ken Griffin said Trump’s trade war has derailed business leaders’ plans to spend the next four years focusing on growth. While much of Wall Street supported Trump in November, many have come to regret their decision amid a weakening US economy and the possible end of US exceptionalism. For his part, Griffin—a big fan of Trump’s policies as a general proposition—said chief executives had been looking forward to a business friendly, regulation-light climate. “Unfortunately, the trade war, which has devolved into a nonsensical place, means we’re spending time thinking about supply chains,” he said. Griffin warned that the US is putting its brand “at risk” and said that Trump’s tariffs could be counterproductive. Those levies include a 10% baseline tariff for most countries and 25% on steel and aluminum imports.

Counterproductive, illegal, both or neither, those tariffs will soon take their toll on US consumers. Revenue from customs duties spiked more than 60% in April as the first levies took effect, bringing in at least $15 billion, according to Treasury data released Wednesday. About two-thirds of importers pay tariffs monthly, on the 15th working day of the following month. Daily collections—those paid at the time of importing—have also risen by about 40% in April compared with the comparable period in March. Included in those collections are the 25% tariffs on steel and aluminum that Trump imposed as of March 12. But the numbers largely do not account for the 10% universal tariffs that Trump announced on April 2—meaning collections in May could surge further. Some or much of the cost of those tariffs is likely to be paid by everyday Americans as the increase is passed on to them.

Any other time, it would have been a signal that the worst of the stock-market’s slide is nearing an end, one that would have set off buy signals at trading desks across Wall Street. Yet two days of seemingly good news for equities didn’t set off a surge of optimism—or even much relief. Instead, it underscored a new reality that’s been confounding investors for weeks: All the price moves now—the sudden surges and the stomach-churning tumbles—are being driven by White House policies that seem to shift constantly and with little to no forewarning, making it nearly impossible to predict where stocks, bonds or the dollar will go next. “This is very frustrating,” said Jay Woods, chief global strategist at Freedom Capital Markets. “Everyday is just uncertainty, uncertainty, uncertainty. We expect one thing to happen and then another thing happens.”

Noah Feldman writes in Bloomberg Opinion that Trump’s disregard for the rule of law isn’t because he’s simply crazy or wants to be a dictator. His actions can be explained rationally just by looking at the events of the past eight years. During that time, Trump was impeached twice, indicted four times and convicted once. But at no time did the 78-year-old real estate developer-turned president pay a price for his wrongdoing. Like any child who faces no consequences for his actions, Feldman writes, Trump has concluded the rules don’t apply to him.

What You’ll Need to Know Tomorrow