Two-Year Treasury Note Reaches a Decade High

In less than 24 hours, China responded with $60 billion worth of tariffs on U.S. goods beginning on Sept. 24. The new round of tariffs from China are said to affect a list of 5,207 products within a range of 5 to 10% as both the U.S. and China have already slapped each other with tariffs worth $50 billion total.

“We still believe that there is scope for a settlement sometime in the first half of 2019, risks that the trade war goes beyond our current assumptions have increased. Should this happen, the impact on the U.S. economy would likely be more meaningful,” said analysts at Deutsche Bank.

Rising Euro Bond Yields

Elsewhere in the world, European bond markets are experiencing similar yield rises as the benchmark 10-year bund reached 0.5% for the first time in almost two months, which extended its September rise to 15 basis points. Later today, $3.51 billion in notes from the German government will be offered for sale.

“Rising sovereign bond yields around the world are driving a weaker USD and a weaker JPY due to the ability of risk sentiment to rally at the same time,” said Saxo Bank’s head of FX strategy John Hardy. “Yes, in many cases the US rate rises are a bit sharper than elsewhere, but the sense of some convergence nonetheless (core EU yields have risen nearly as fast as US yields) is helping other currencies to keep pace with the greenback and even rally sharply.”

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