Trade Tensions Intensify

In a dramatic escalation of trade tensions, China has announced a 34% retaliatory tariff on all American goods. This move directly responds to President Donald Trump's recent tariff hike, which increased duties on Chinese imports to 54%. The announcement has sent shockwaves through financial markets, with US Treasury bond yields tumbling sharply.

Market Reaction

By 6:37 am ET, the financial markets had reacted strongly to the news. Key benchmarks saw significant drops: the 2-year yield fell by 19.8 basis points to 3.527%, the 10-year yield decreased by 16.2 basis points to 3.893%, and the 30-year yield slid 12.6 basis points to 4.358%. These movements reflect growing fears among investors about a potential trade war and its implications for the global economy.

Looking Ahead

The latest developments have raised concerns about the possibility of a recession, as the tit-for-tat tariff increases between the world's two largest economies threaten to disrupt global trade flows. Investors and policymakers alike are closely monitoring the situation, hoping for a resolution that can avert a full-blown trade war.