U.S. stock futures nosedived early Tuesday after a weekend full of headlines that snapped investors back to reality about just how unstable and unpredictable the political climate has become. As the shortened market week got underway, Japanese bond-market turmoil also added to the ambient anxiety.

S&P 500 futures dropped around 1.6%, the Dow fell 1.4%, and the Nasdaq $NDAQ led the way down with a 2% slide. The Russell 2000, a benchmark for small-cap stock performance, trended 1.8% lower. Fear is clearly in the air, with volatility spiking over 6% and investors piling into the usual safe havens, sending gold soaring almost 3%.

President Donald Trump is back at the center of market anxiety

Over the weekend, Trump renewed his fight with Europe by threatening tariffs unless Denmark lets the U.S. “buy” Greenland. European leaders weren’t amused, pointing out that this would blow up last summer’s trade deal with the E.U. Now, in response to Trump’s latest threats, the E.U. is considering slapping tariffs on tens of billions of dollars’ worth of U.S. goods.

As commentators point out, Trump has often, in the past, floated threats of high tariffs or even annexation of self-governing and sovereign territory when seeking leverage in deal-making or other negotiations; the Truth Social posting sprees are part of the same pattern.

Trump’s surprise announcement that he’s planning to sue JPMorgan Chase is also grabbing headlines

Trump claims, without evidence, that the mega-bank “debanked” him after the attack on the U.S. Capitol by rioters on January 6, 2021, which JPMorgan $JPM flatly denies. Whether such a lawsuit is ever filed, much less successfully pursued, may be beside the point.

A core risk facing prominent U.S. banks right now isn’t credit quality or earnings power so much as political pressure. Last week, JPMorgan delivered a clean, banner set of results, but that strength has arguably made it more—not less—vulnerable to White House pressure. Trump has, in recent days, repeatedly singled out banks over credit-card interest rates, publicly floated caps with no clear legal basis, and attacked regulators and the Federal Reserve in ways that put bank executives in an increasingly challenging position.

Earlier this year, JPMorgan strategist Michael Cembalest acknowledged self-censoring client materials out of concern that critical analysis could draw unwanted attention from the administration, in a striking example of how political pressure can operate even without formal enforcement. And the risk, since that revelation, has arguably only grown. Scrutiny and potential political aggression directed at banks and regulators could affect everything from public commentary to capital allocation.

Japanese bond market risk spreads

Also on Tuesday, Japanese government bonds had what analysts are widely describing as a meltdown.

Long-term yields hit record highs after the Prime Minister pushed for tax cuts. The effect is now rippling through global bond markets, including U.S. Treasuries, pushing yields higher and putting additional pressure on “risk assets,” including stocks.

Less than a year on from “Liberation Day,” markets find themselves staring down rising bond yields, tariff and annexation threats aimed at longtime allies, and yet more uncertainty about whether key institutions can stay independent amid historically unprecedented political pressure. Meanwhile, the Supreme Court decision on key aspects of the legality of Trump’s tariffs is expected as early as today.

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