US futures pare losses but caution remains ahead of the weekend

The situation last week of course was not helped by China announcing 34% retaliatory tariffs against the US here. Ah, just 34%? Good times. 10-year Treasury yields were also sitting at 3.88% then, and now they’re at 4.45%. If anything, it goes to show what a wild one week it has been in markets.

Anyway, S&P 500 futures are more or less flat at the moment ahead of European trading. Market players are continuing to digest the impact of Trump’s tariffs and how bad things might get between US and China.

The long story short is that there’s nothing good that is set to come out of tariffs, even if they stay as they are now. An accurate estimate of the impact of the tariffs is tough to gauge but as things stand, the global economy is still set to get hit hard. Not least with the surge in tariffs between the US and China. Just look at this chart:

Going back to stocks and market sentiment today, it’s also important to look at the situation in the bond market.

The pain there got Trump to blink earlier this week but that hasn’t helped. 30-year yields are back at 4.90% again today. So, something’s gotta give.

It is either Trump, China, or the Fed that has to blink again next now. And if neither of them do, we can expect another rout in markets later in the day when traders and investors realise they won’t be bailed out ahead of the weekend.

This article was written by Justin Low at www.forexlive.com.