It's a 'bond story' now

What matters in U.S. and global markets today

By Anna Szymanski, Editor-in-Charge, Reuters Commentary

Global markets have been pummelled yet again on Wednesday as President Donald Trump's eye-popping 104% tariffs on China took effect and a savage selloff in U.S. bonds sparked fears that foreign funds were fleeing U.S. assets.

Mike Dolan is off today, but we're still here to provide you with an overview of all the market news you need to start your day. You should also check out Mike's latest column to find out why the yuan is making analysts across Wall Street rip up their recently revised dollar forecasts.

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This week has brought crisis-era volatility to markets, erasing trillions of dollars in value from stocks and hitting commodities and emerging markets with force.

At the epicentre of the latest rout are U.S. Treasuries, effectively the backbone of the global financial system.  The benchmark U.S. 10-year yield rose by as much as 26 basis points to a high of 4.515% in Asia, before the selloff abated, leaving it up 7.7 bps at 4.34%. 

"Last week was an equity story but as ever, it's moved from an equity story to the more important bond story," Chris Beauchamp, chief strategist at IG, said. "This is the financial plumbing and clearly, the plumbing has begun to seize up." 

Potentially adding to the pressure on Treasuries is an auction of new 10-year notes later on today that could prove a crucial litmus test of investor appetite for U.S. government debt.

Meanwhile, the yield on the 30-year Treasury briefly spiked above 5% before dropping back below 4.9%.

Not to be outdone, British 30-year government bond yields surged to their highest since 1998 on Wednesday. The dollar - which is typically the ultimate safe-haven - fell broadly, as investors dashed into the likes of gold and the Swiss franc, accelerating the flight from stocks and industrial commodities. 

Overnight, Washington confirmed 104% duties on imports from China would take effect at 12:01 a.m. Eastern Time, as planned. That deadline passed with no new developments on trade. 

China's Onshore yuan finished its domestic session on Wednesday at 7.3498 per dollar, the weakest close since December 2007.

U.S. stock futures were anchored in negative territory early on Wednesday. The S&P 500 has lost $5.8 trillion in stock market value, the deepest four-day loss since it was created in the 1950s.

In Europe, the STOXX 600 fell nearly 3% in early trading, bringing the loss in market capitalisation since April 1 - the day before Trump's 'Liberation Day' - to roughly $1.4 trillion.