As China Reliates, ES Futures Drop With Treasuries – Europe Market Wrap

The rush from stocks and bonds gained traction on Wednesday as China responded to US tariffs with additional levies of its own, increasing the ante in the trade war that has roiled global markets.

US share futures sank approximately 1.7% as China imposed fresh 84% tariffs on US goods; China had previously signalled its willingness and ability to “fight to the end.” Stocks in Europe fell more than 4%. The 10-year Treasury yield rose by 5 bps to 4.35%, adding more than 40 bps this week.

The yield on 30-year Treasuries momentarily rose above 5% for the first time since November 2023, amid mounting concerns about the haven status of US sovereign bonds. The selloff accelerated falls in government debt in other markets. Borrowing rates in the UK have risen to their highest level since 1998, while Japanese 40-year bond yields have set a new record. The Dollar fell for a second day.

The S&P 500 fell more than 12% on Tuesday, the most since the president revealed global tariffs last Wednesday. It was also another day of practically unparalleled volume on the US equity markets, with more than 23 billion shares traded.