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Stocks, Dollar Slip, Bonds Pummelled Again as Trade War Roils Markets
Global markets took a hit on Friday as the intensifying trade war between major economies sparked a wave of investor anxiety. Stocks fell sharply, the U.S. dollar weakened, and bond markets suffered their worst week in decades, signaling growing fears of a global recession.
The turmoil followed a series of tit-for-tat tariff increases between the U.S. and China, with U.S. President Donald Trump raising duties on Chinese goods to an effective rate of 145%. Beijing responded with its own tariff hikes, fueling concerns of prolonged economic damage.
The selloff in U.S. Treasuries intensified during Asian trading hours, with the 10-year yield climbing to 4.45%, marking the steepest weekly rise since 2001. Meanwhile, the dollar dropped to its lowest level in a decade against the Swiss franc and hit a six-month low versus the yen. The euro surged 1.7% to levels not seen since February 2022.
Investor confidence in U.S. assets has been shaken, with analysts warning that the decline in both the dollar and bond markets reflects deeper concerns than just slowing growth or trade uncertainty.
In Asia, Japan’s Nikkei dropped 4.3%, while South Korean stocks declined nearly 1%. Taiwan’s index rebounded to post gains. Chinese markets remained relatively stable, with Hong Kong’s Hang Seng up 0.56%.
Safe haven flows drove gold to a new record high of $3,210 per ounce. Oil prices, however, slipped again as traders priced in the possibility of a prolonged slowdown, with Brent and U.S. crude futures both posting weekly losses.
Despite a surprise drop in U.S. consumer prices in March, markets remain focused on the broader implications of escalating tariffs. Analysts say the current bond market movements suggest either a repricing of risk by large investors or concerns about worsening U.S. fiscal health in a slowing economy.
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