From Marc Chandler at Bannockburn Global Forex:
Overview: The trade war continues to roil the capital markets. The US corrected itself and said that rather than 125%, tariffs on China have been raised by 145%. And China retaliated by hiking the tariff on US goods to 125%. Of course, the sensitivity of demand to price increases (elasticity) varies from product-to-product but now it would appear that most goods are uncompetitive, and further increases are practically meaningly. The equity markets were roiled first. Asia Pacific equity markets were mixed today HK, mainland China, Taiwan and India rose today. The index of mainland stocks that in HK are off 7.3% this week, while the Hang Seng, Taiwan's composite, and Singapore are off over 8% this week. Japan's Topix is off less than 1%. Europe's Stoxx 600 is of 1.2% today and nearly 3% for the week, after last week's 8.4% hit. US index futures are, ironically, little changed now. The S&P 500 is up about 3.5% on the week coming into today and the Nasdaq is up a little more than 5%.
Bond markets are broadly mixed today. The US 10-year yield is off two basis points to about 4.40%, up 22 bp on the week. The stronger-than-expected UK GDP may be weighing on Gilts, where the 10-year yield is up four basis points today and seven on the week. Eurozone benchmark 10-year yields are narrowly mixed. The 10-year JGB yield fell five basis points, paring this week's gains to nearly 20 bp. The stress is hitting the dollar in a dramatic way. Although the greenback is paring its loss ahead of the North American open, about half of the G10 currencies have gained more than 1% against the greenback today. The Swiss franc has led this week's moves with a 5% gain, while the New Zealand dollar is in second place with a 3.7% gain to edge ahead of the euro's 3.7% appreciation. Gold has raced to a record high near $3230, a roughly 6.3% gain this week. May WTI is quiet, straddling $60 a barrel. It is off around 2.75% this week after dropping 10.6% last week.
USD: First, the US equity market cracked. Then, it was the bond market. Now it is the dollar. It began in earnest yesterday....
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