The good times are over. Hopes that some form of negotiation on tariffs would be reached have been dashed by theTrump's frontal attack on China and investors have started selling stocks again, flocking to the safe havens of the yen and Swiss franc. The price of the falls Petroleum and it weakens the dollar. They fly bond yield rates US Long-Term US and a Treasury auction was weaker than expected, triggering fears about US debt. Recession anxiety has returned.
At 00.01:XNUMX (US time) today, President Donald Trump's reciprocal tariffs, including 104% on Chinese products, along with import duties on about 60 trading partners that run trade surpluses with the United States. This comes after a 10% base tariff went into effect on Saturday for most U.S. trading partners. Markets had been pinning their hopes on negotiations, but so far it looks like Washington and Beijing are headed for a head-to-head. Asian stock markets have turned red and European futures are pointing to a significantly lower open.
Trump's Happiness and Summers' Alarm
“The tariffs are in place and the money is coming in at a level never seen before, and It will be great for us. It will be great for other countries, too. We have been robbed and abused by other countries for many years,” Trump said Tuesday at a White House event. “We are doing very well in making what I call tailor-made deals, not off-the-shelf deals — highly customized deals.” Trump argues that the taxes will increase U.S. prosperity and boost domestic manufacturing.
But his approach has raised eyebrows criticism from Wall Street, economists and some members of Trump's own party, who questioned the administration's methodology and warned of economic fallout that could include higher consumer prices and slower growth, if not a recession.'former Treasury Secretary Lawrence Summers has sounded the alarm: the United States is likely heading for a recession, with the possibility that 2 million Americans left without jobs, due to ongoing tariff increases. “It’s more likely that we’ll have a recession, and in the context of a recession, we’ll see another 2 million unemployed,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. “We’ll see losses in household income” of $5.000 per household or more, he said.
Wall Street reverses course at the end. Fear index soars
For most of the day yesterday at Wall Street It seemed that the panic sparked by Donald Trump's trade war had largely subsided, and US stocks rallied on the back of strong rallies in Asia and Europe. But as the hours passed, that optimism slowly, then quickly, disappeared, replaced by severe volatility. Ultimately, investors in stock, bond and currency markets were once again faced with the same uncomfortable question: is the US president really willing to risk a global recession to reorganise global trade? So the S&P 500 index, which had risen as much as 4% in early trading, in what was its biggest gain since 2022, on hopes that Trump would open trade deals, then closed down 1,6% after the White House said it would continue its retaliation against China. Themarket fear indicator, The VIX index, after easing, rose to close at its highest since the start of the pandemic.
Fears also for the increase in the cost of US debt. A weak Treasury auction
A violent sell-off of US Treasury securities, which evokes the “rush for money” of the Covid era, has rekindled fears of fragility in the world's largest bond market. The Treasury market, which is worth 29.000 billions of dollars, had soared in recent weeks, as investors dumped stocks for the safety of government bonds in a tariff-fueled risk-off reversal. But even as stocks remained under pressure, Treasuries were hit by a sell-off that sent benchmark yields soaring in one of the most extreme swings for 10-year yields in two decades.
Among the US Treasury securities, yields took another sharp turn U-turn after the dizzying peak on Monday, with the 30-year yield soared in late trading to post its steepest two-day gain in five years, closing at 4,76%, nearly half a percentage point above Monday's low. The 10-year yield which has risen to near 4,3%, higher than it was at the end of March, pushing up the cost of mortgages and other types of loans. A weak government bond auction has sown fears of a pullback from foreign investors. Upward pressure on U.S. government borrowing costs could continue, as the tariffs threaten to trigger another inflationary shock and worsen the deficit if tax revenues fall amid a slowdown in activity.
China does not negotiate and studies other ways
I Chinese duties now include previous 20% duties tied to fentanyl trafficking, a 34% “reciprocal” tariff derived from a calculation based on bilateral trade balance, and an additional 50% tariff announced by Trump after Beijing said it would respond by taxing U.S. exports to China. Chinese government has said he will “fight to the end.” Escalating tensions make an imminent call between Trump and Chinese President Xi Jinping less likely, and the latest comments have raised the risk of a prolonged trade war between the world’s two largest economies. Xi’s number two, Li Qiang, has said his country has ample policy tools to “fully offset” any negative external shocks from Trump’s tariffs. According to Bloomberg China is orchestrating a orderly weakening of the yuan, with the central bank at the forefront of reducing some of the economic impact of the trade war, without destabilizing financial markets. The dollar-yuan cross rises to 7,349, levels seen only a few times in the last 25 years. People’s Bank of China weakened the yuan's daily benchmark rate for the fifth consecutive session today, but moderated the pace of its adjustment. State-owned banks, the agency reported, were seen sell dollars in large quantities to support the yuan in the onshore market. The offshore yuan rose to its highest level in a month, paring a 1,1% decline on Tuesday that pushed it to its lowest level since the market was created in 2010.
The CSI 300 Index of Stock Markets Shanghai and Shenzhen +0,1%. Hang Seng by Hong Kong -1,9%. Taipei Stock Exchange, Index Crashes Taiex is down -4% and reaches its lowest point since the beginning of 2024: last night the island of Taiwan was hit by a earthquake magnitude 5,8 on the Richter scale.
Asian countries are bearing the brunt of the measures, with Cambodia and Vietnam facing tariffs of 49% and 46% respectively. In emerging markets, the Indonesian Rupiah fell to a record low and was on the verge of breaking above 17.000 per dollar. yuan weakened to a 19-month low, while its offshore counterpart slowly edged away from the record low hit during heavy overnight trading.
Tokyo Stock Exchange Drops Sharply: Nikkei index -4%The yen strengthens and approaches its October highs of 144,7 to the dollar, putting Japanese exports on the ropes. The Kospi index of Alone loses -2%. Ftse Straits Times by Singapore -2%. Indian stock market slightly down.
European stocks seen opening lower. At Piazza Affari to watch Leonardo
European stocks set to open sharply lower, EuroStoxx50 index futures -4%.
Leonardo. The press reports that the CEOs of Airbus, Leonardo and Thales are expected to meet today with the European Commissioner for Antitrust, Teresa Ribera, to discuss a plan for a joint venture in the space sector. The plan, in an initial phase, envisages a joint venture with 33% ownership by each of the three operators.
Eni. Oil down 3%. Mozambique has approved the development plan for Eni's second LNG project. The green light concerns the development and production of 3,55 million tons per year of LNG, for 30 years, in the Coral Eocene 441 field, located in the offshore area of the Rovuma basin. The value of the development is approximately 7,2 billion dollars.
Italgas. Bernstein raises target price.
Snam Bernstein cuts target price
Stellantis It has halted production of Chinese automaker Leapmotor's T03 electric city car in Poland and is evaluating alternative production options.
Unicredit. The Romanian branch has structured a synthetic securitization with the European Bank for Reconstruction and Development (EBRD) on a portfolio of loans to small and medium-sized enterprises of EUR 775 million.
