U.S.-China trade relations are at an important inflection point. Tensions are further escalating as a result of these recent accusations. The United States has recently accused China of violating a stage one temporary trade agreement. In turn, Beijing has seemingly attempted to shift blame, accusing the U.S. of violating other terms of the agreement as well. The continued dance between the two nations has raised fears amongst investors. Analysts are equally concerned about the long-term nature of their economic partnership.
As the trade war continues to develop, investors are keeping a hawkish eye on key economic indicators that may impact investor optimism. Stay tuned for those important April reports. Other important economic indicators worth watching are the job openings data, durable goods data and factory orders data that will provide clues about the health of the U.S. economy.
In reaction to the escalating trade tensions, Treasury yields have started to roll over. The 2-year yield was last down over 2 basis points at 3.916%. Likewise, the 10-year Treasury yield dropped more than 5 bps to 4.41%. The more-sensitive, longer-term 30-year Treasury yield fell, down by more than 5 bps to 4.937%.
One thing investors need to keep in mind is that yields and prices go the other way. As yields fall, the prices of existing bonds tend to increase. This trend may have profound implications for investment strategies during a time of uncertain and extreme economic turbulence.
European Union has warned that it is “willing and able to retaliate” on escalating trade war. This message highlights the cascading effects of U.S.-China relations on global markets and trade policy.
With these exciting developments still underway, the financial community is keeping a watchful eye. Analysts insist that watching key economic indicators will be critical to success. This continued vigilance allows us to better assess the potential trade-related risks to economic growth, market conditions, and the national economy.