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- US retailer Five Below has compelty halted its business with China
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- EU leaders plan to travel to China for a meeting with Chinese President Xi in July
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Fears over the economic fallout from Trump’s tariffs intensified during the Asian session, compounded by fresh concerns over financial stability. A widely circulated Bloomberg piece — shared heavily across social media — raised questions about the Federal Reserve’s independence, further spooking markets:
The spectre of an over-leveraged basis trade added to the pressure, triggering heavy selling of both the US dollar and US assets. The reaction was swift and stark:
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US 10-year yields surged to 4.48%, marking the largest weekly jump since 2001
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US 30-year yields hit 4.95%, the biggest weekly gain since 1982
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The yield curve steepened to levels not seen since February 2022
Liquidity was thin, which only amplified the sharp moves.
As for FX, the USD index, DXT, dropped under 100 for the first time since July 2023:
- USD/JPY took a look under 143.00
- EUR/USD hit highs above 1.1350
- CHF and GBP also rose
- AUD and NZD gained a little, as did CAD
Meanwhile, Chinese equities broke a three-day winning streak after the US revealed its China tariffs now total a staggering 145%, rekindling investor anxiety over trade tensions.
This article was written by Eamonn Sheridan at www.forexlive.com.