US-China trade war is the major, if not the only, theme today. Trump “demonstrated” his threat to China by warning the latter not to retaliate with his tweets. Whether Twitter is blocked in China or not, we believe that it’s a known (including Trump) that Xi doesn’t read it. Anyway, China is said to hit back on tariffs on some USD 60B in US import, with tariffs ranging from 5-25%, effect June 1.
Global stock markets suffer steep selloff today as there is only one way to go for US and China, further escalation in trade and diplomatic tensions. In particular, DOW future is down -400pts as US stocks are set to open sharply lower. 10-year yield is currently down -0.043 at 2.425 and 3-month to 10-year yield inversion is back. China Shanghai SSE just lost -1.21% and defended 2900 handle. But Yuan selloff is accelerating with USD/CNH breaking 6.9 handle.
In the currency markets, Australian Dollar leads other commodity currencies down. Swiss Franc and Yen are the strongest ones. In particular, USD/JPY breaks 109.47 temporary low to resume recent decline. USD/CHF also breaks 55 day EMA decisively. Both are near term bearish developments.
In Europe, currently:
- FTSE is down -0.25%.
- DAX is down -1.00%.
- CAC is down -0.76%.
- German 10-year yield is down -0.009 at -0.051.
Earlier in Asia:
- Nikkei dropped -0.72%.
- Hong Kong was on holiday.
- China Shanghai SSE dropped -1.21% to 2903.71.
- Singapore Strait Times dropped 1.20%.
- Japan 10-year JGB yield dropped -0.0008 to -0.046.
