Futures markets on Sunday were signaling more market carnage on Monday after two days of extraordinary declines. Normally you’d expect some rebound, even if it’s a dead-cat bounce, after such a huge selloff. But there are canaries in the tariff mine that are warning of economic trouble ahead.

One canary is the biggest selloff in the junk bond market since 2020, the pandemic year. The premium that investors demand for holding high-risk corporate debt rose a full percentage point to 4.5% late last week after Mr. Trump’s tariff assault, according to the ICE BofA index.

At a minimum this is a sign that investors are hedging their bets on the economy. At worst it is a signal of fear that the tariffs and their consequences could trigger defaults. Treasury Secretary Scott Bessent wanted a lower yield on the 10-year Treasury note, which he now has. But that yield can fall in anticipation of slower growth as much as from lower inflation. We hope someone at Treasury is paying attention to the corporate debt market.

A second canary is the flight from the U.S. dollar. Typically times of uncertainty lead to a flight to safety, which usually means U.S. dollar assets. This time the dollar has fallen against the euro, the yen and British pound. The dollar rebounded some on Friday, but further dollar weakness would be another bad omen.

A third canary is the shift across Wall Street on recession risks. Our friends at Evercore ISI see the tariffs as a “substantial drag” on growth. They’ve reduced their GDP growth estimate for the year to 1% and raised the probability of recession this year to 40%.

JPMorgan ’s economists now predict a recession, albeit a mild one, at minus-0.3%, with the jobless rate rising to 5.3% from 4.2% in March. More or less every economist not working for Peter Navarro in the White House has lowered estimates of growth in the wake of the Trump tariffs. This isn’t the boom Mr. Trump promised working-class voters.

The Wall Street consensus has been wrong before, and nothing is foreordained. Trade retaliation could be less than feared, and Mr. Trump could change course. But policy makers ignore market signals at their peril.

The Wall Street Journal