Donald Trump famously believes that "trade wars are good, and easy to win," as he tweeted in 2018. The market, however, believes the opposite: That a trade war is bad, is easy to lose, and could plunge the U.S. into an avoidable recession.

Why it matters: Trump 1.0 listened to the market. Trump 2.0 is very different.

• Traders are no longer convinced they can rely on the "Trump put," the idea that the president will reverse course on policies the market doesn't like.

What they're saying: The clearest articulation of the Trump administration's attitude to the market came from Treasury Secretary Scott Bessent.

• "Wall Street's done great," he said Tuesday, "but we have a focus on small business and the consumers. So we are going to rebalance the economy."

Between the lines: Bessent singled out "the level of the 10-year bond" as "one of the biggest wins for the American people."

• A former macro hedge fund manager, Bessent knows the decline in long-term interest rates is a function of pessimism about future growth, and expectations that the Fed is going to have to keep rates low to stimulate employment.

By the numbers: On February 11, the market put just a 1% probability on the Fed cutting rates four times this year, assuming each cut is 25 basis points.

• Today, the probability of at least four cuts has risen to 30%, while the probability of three or more rate cuts has ballooned to 62%.
• Given the stubbornness of inflation, which is likely to become even more stubborn as higher tariffs start to bite, the only reason for the Fed to cut that many times would be a significant economic slowdown, or perhaps even a recession.

The big picture: There is "a new reality of higher domestic prices and weaker growth, owing to Trump's tariff measures," George Vessey, the lead macro strategist at Convera, wrote in a note.

• That is causing the dollar to weaken, the opposite of what should happen when tariffs rise, according to textbook economics.
• It's true that all things equal, U.S. tariffs should cause the dollar to strengthen, as fewer dollars get sold to pay for imports.
• But these tariffs are so big, and so potentially damaging to the U.S. economy, that — according to foreign exchange markets — domestic macroeconomic effects are likely to dwarf the effects of capital flows.

The bottom line: As we here at Axios Markets love to remind you, the stock market is not the economy, especially when it's dominated by megacap tech companies.

• But there are many other indicators of where the markets think the economy is headed, and all of them are flashing "very worried."

The administration's efforts to purge the federal workforce are hitting speed bumps, but they're not stopping.

Why it matters: The firings of tens of thousands of employees happened lightning fast, and more are coming.

Zoom in: In two words, an IRS employee who recently resigned from the agency explained why: "The uncertainty," he told Axios.

• There was the return to office order, but no office to go to. The agency didn't have the space for him. Then there was the "fork in the road" push to resign, rumors of layoffs, and the firings of probationary employees.
• Now the IRS plans to cut its workforce in half, the New York Times reported.
• "Are we going to have a job next week? An office?" the IRS employee said, requesting anonymity because he's still working there for a few more days.

Where it stands: Yesterday the USDA was ordered to reinstate nearly 6,000 employees. Last week a federal judge ruled the initial order from the Office of Personnel Management to fire probationary workers was unlawful.

• Though the judge ruled that OPM's orders were illegal, he did not order employees be reinstated for technical reasons, including the plaintiffs' standing to sue and the fact that agencies weren't named defendants.
• The plaintiffs hope the judge will eventually issue such an order, but they must first amend their lawsuit and have another court hearing next week.

Between the lines: Even as some of these fired workers are reinstated, agencies are moving ahead with the next step: Plans to do wide-scale reductions in force that will be harder to overturn.

• In a leaked memo, the Department of Veterans Affairs has outlined its intention to return to 2019 staffing levels, which would mean firing as many as 83,000 workers.

In the meantime, federal workers are in a terrible spot, with no severance, no benefits, and for some, unemployment insurance may be tricky to secure, Michele Evermore, a senior fellow at the National Academy for Social Insurance, told Axios.

The bottom line: Firings, once set in motion, are hard to slow down.

The impact of radical cuts to the federal government is being felt in cities across America, like Pittsburgh, where the local economy could lose billions of dollars if federal health research cuts go through, Axios Pittsburgh's Ryan Deto reports.

Why it matters: The Pittsburgh economy is largely driven by health care, universities and tech — the "eds and meds" — and medical research is a huge part of that equation, according to Stefani Pashman, CEO of pro-business coalition Allegheny Conference on Community Development.

Context: The National Institutes of Health announced last month it would cut $4 billion in grant funding it sends to universities, including the University of Pittsburgh, and other research institutions.

• A federal judge has blocked some NIH cuts from taking effect for now.

What they're saying: "This will impact our entire community. Everyone in Western Pennsylvania has some connection to Pitt," said Tyler Bickford, head of the United Steelworkers union that represents 3,500 faculty members there.

By the numbers: Pashman told Axios that NIH funding provides $2.5 billion in economic impact for the area. NIH funding also supports 21,000 jobs across Pennsylvania, per U.S. Rep. Summer Lee.

What they're saying: "This is an industry that is the backbone of this region," Lee said. "It would be as big as making cuts to U.S. Steel in its heyday."

The other side: The cut proposals are being led by Elon Musk's DOGE. Musk said in February that some universities were disproportionately using the federal funds on overhead costs instead of directly on research.

The bottom line: Pitt graduate student and researcher Alisa Omelchenko said the NIH funding pause is already stopping work at labs in her Computational Biology department.

• She noted the uncertainty could lead medical researchers to choose institutions outside of Pittsburgh, and possibly outside of America, to conduct their work.