U.S. stocks extended their retreat into Thursday afternoon trading, while Treasury yields moved and the dollar resumed its recent slump, as global markets continued to react to the dramatic tariff U-turn unveiled yesterday by President Donald Trump.
Gold roared back to a fresh record high in late-morning trading, with spot prices rising 2.72% to $3,171.49 per ounce, taking the bullion’s year-to-date advance to around 20%. Spot prices were last marked at around $3,164.50 per ounce.
The moves suggest investors are shunning the U.S. dollar as a safe-haven trade amid the ongoing tariff chaos, with the greenback on track for its biggest one-day decline in 10 years against the Swiss franc and the dollar index at the lowest levels since late September.
Big sale
The Treasury sold $22 billion in new 30-year bonds in the last of three auctions this week that raised around $119 billion.
Demand for the paper ticked higher, with total bids topping $53.4 billion and the level of indirect bidders, comprised of mostly foreign central banks, rising by 1.5 percentage points from last month’s sale to 61.9%. Dealers held onto around 12.5% of the sale.
Benchmark 10-year note yields were last marked 2 basis points lower at 4.341%, a move that has helped stem some of the afternoon in stocks.
Tariff rate on China raised to 145%.
Stocks are giving back a big chunk of yesterday’s historic rally, which saw the S&P 500 notch its biggest single-day advance since 2008, as the White House ratchets up new tariffs on China and bond markets continue to wobble in the face of slowing growth and rising inflation risks.
The S&P 500 was last marked 315 points, or 5.8% lower on the session, with the Dow falling more than 2,000 points. The Nasdaq slumped 1,153 points, or 6.74%. Some of the morning declines were accelerated by a report from CNBC that said the Trump administration had raised the effective tariff rate on China to 145%.
Benchmark 10-year yields were last marked at a session high of 4.361% while the U.S. dollar index slumped 1.85% to 101.003, the lowest since late September.
The VIX index, meanwhile, surged 43.3% to $49.16, suggesting daily swings for the S&P 500 of around 3.07%, or 160 points.
US Treasuries remain a cornerstone of global bond markets, their traditional notion as a completely risk-free investment may need to be revisited in light of several contemporary factors, and the international rating agencies — Standard & Poors, Moody’s and Fitch Ratings — are very likely to downgrade further U.S. outlooks and even possibly scorings in response to the elevating risks arising from the tariff wars and their possible consequences,” said John Murillo, chief dealing officer at London-based B2Broker.