Entering into US session, Yen and Swiss Franc are the strongest ones today as risk aversion seems to be intensifying. On the one hand, Huawei was given another blow after ARM is said to cut ties with the Chinese telecom giant. On the other hand, China is stepping up hard line rhetoric on trade with US. Asian markets closed broadly lower while European indices are in deep red. DOW futures is down more than -200 pts at the time of writing. German 10-year yield is back pressing -0.1 handle. US 10-year yield is down -0.025 at 2.361. Outlook in the financial markets are rather bad.

Chinese Commerce Ministry spokesman Gao Feng warned: “If the United States wants to continue trade talks, they should show sincerity and correct their wrong actions. Negotiations can only continue on the basis of equality and mutual respect… We will closely monitor relevant developments and prepare necessary responses.” Foreign Ministry spokesman Lu Kang said “relevant U.S. actions obviously do not create a good atmosphere or environment for consultations.” It’s pretty clear there is no case to resume trade negotiations any time soon. US-China trade war will at least drag into US elections next year, with possibility of much more serious escalations.

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In Europe, currently:

  • FTSE is down -1.21%.
  • DAX is down -1.63%.
  • CAC is down -1.58%.
  • German 10-year yield is down -0.0148 at -0.099.

Earlier in Asia:

  • Nikkei dropped -0.62%.
  • Hong Kong HSI dropped -1.58%.
  • China Shanghai SSE dropped -1.36%.
  • Singapore Strait Times dropped -0.70%.
  • Japan 10-year JGB yield dropped -0.0104 at -0.061.

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