(Bloomberg) — Treasuries sank alongside the dollar at the end of a chaotic week, as the intensifying US-China trade spat threatens turmoil across the global economy and the financial system. Stocks whipsawed, while fear continues to grow on Wall Street that foreign investors are beating a retreat from American assets.
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Friday’s price action shows little signs of relief in the recent bouts of volatility, with concerns over President Donald Trump’s fast-evolving trade policy shaking markets, businesses and consumers while lifting both short- and long-term inflation expectations to multi-decade highs. Equities swung between gains and losses. Concerns that growth will be derailed sent the greenback to a fresh six-month low. US 30-year yields came closer to the 5% mark.
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“The question of a potential dollar confidence crisis has now been definitively answered – we are experiencing one in full force,” ING Bank NV strategists including Francesco Pesole wrote in a note. “The dollar collapse is working as a barometer of ‘sell America’ at the moment.”
In the latest tit-for-tat move, China announced it would raise tariffs on all US goods from 84% to 125% and warned that it plans to “resolutely counterattack and fight to the end” if the US continues to infringe on its rights and interests. The Ministry of Finance also called the Trump administration’s actions a “joke” and said it no longer considers them worth matching.
Banks kicked off the earnings season, withs JPMorgan Chase & Co. posting record equity trading revenue but sounding a warning on the souring economic outlook. Rival Morgan Stanley reported soaring trading revenue amid market volatility.
“The economy is facing considerable turbulence,” JPMorgan CEO Jamie Dimon said in commentary accompanying the results. “Clients have become more cautious amid an increase in market volatility driven by geopolitical and trade-related tensions.”
BlackRock Inc. reported lower-than-expected net inflows in the quarter — which ended just before Trump unleashed his latest tariffs — with CEO Larry Fink likening current conditions to the “structural shifts” seen during the global financial crisis and the Covid pandemic.
