The current state of the Trump trade may reflect a Wall Street adage: buy the rumor, sell the fact.

The so-called Trump trade, which swept markets at the end of last year, has stumbled in 2025—at least so far.

Investor expectations for Trump’s second term included: stocks soaring due to tax cuts and deregulation; interest rates and inflation creeping up as tariffs raised consumer costs; and the dollar continuing to rise, supported by higher-for-longer interest rates.

But reality has diverged. Investors have been jolted by a weaker-than-expected stock market, driven by Trump’s flip-flopping approach to issues like trade policy. They’ve been left in a state of uncertainty, wondering whether Trump’s latest proposals will become meaningless within minutes.

Despite a surprisingly hot January inflation report pushing yields and the dollar higher, both remain near flat for the year so far, while U.S. stocks have further narrowed their yearly gains, signaling a faltering Trump trade.

Here are three popular Trump-linked bets that haven’t panned out in 2025 so far:

Stocks

Expectation: The stock market would continue rallying, driven by tax cuts, deregulation, and a focus on lowering energy costs under the Trump administration.

Reality: While the S&P 500 is up about 3% year-to-date, it lags behind international peers, with the MSCI All Country World ex-USA Index rising roughly 5% over the same period.

U.S. Stocks Lag International Peers

Steve Sosnick, chief strategist at Interactive Brokers, told Business Insider: ‘There’s clearly a move toward a looser regulatory climate, but because the initial changes were implemented so quickly, the courts have put many on indefinite hold instead.’
 

Moreover, individual stocks and assets tied to the Trump trade are taking a hit. As of Tuesday, Trump Media & Technology Group (DJT) and Tesla (TSLA) shares have dropped 11% and 19%, respectively. Bitcoin surged to six-figure records weeks after the election but has since stalled. The token is up just 3% year-to-date, as policy announcements have largely failed to catalyze further gains.

Bond Yields

Expectation: Bond yields were expected to rise due to the prospect of mass deportations and aggressive tariffs stoking inflation, potentially limiting the Fed’s ability to cut rates and even raising the odds of rate hikes.

Reality: Since the start of the year, 10-year U.S. Treasury yields have edged slightly lower, recently falling from 4.57% to 4.42%. The likelihood of up to two Fed rate cuts this year has increased since January. Yields did rise 11 basis points on Wednesday following a higher-than-expected January inflation report.

Dollar

Expectation: The dollar was anticipated to strengthen against international currencies due to protectionist trade policies under Trump potentially lifting interest rates.

Reality: The U.S. dollar index, which measures the dollar against a basket of foreign currencies, is down about 0.4% year-to-date, though it ticked up on Wednesday after the inflation data.

'Tariffs were thought to be a boon for the dollar, but the stop-and-start nature of some key announcements has blunted that rally,' Sosnick said.

Sosnick noted that the current state of the Trump trade reflects a Wall Street adage: buy the rumor, sell the fact.

He said: ‘Markets are very good at pricing in any potential benefits that might materialize, whether from government or business... However, if the timeline for realizing those benefits stretches longer than expected, some disappointment sets in.’

'In a way, that’s what we’re seeing now. Even a government that seems to be moving quickly doesn’t necessarily meet the lofty expectations of impatient investors.'