And that has inadvertently also seen the euro and pound fall after a period of relief to start off the week
The surprising thing right now is that markets aren't entirely risk off just yet. The one thing that remains unphased in all of this is Treasury yields. US 10-year yields remain near the highs for the day at 2.948% currently, up by 1.7 bps. But everywhere else we're seeing some degree of risk aversion, including in E-minis:
The trade headline here says that China is to seek permission from the WTO to retaliate against the US over the latter's failure to modify its various anti-dumping methodologies. It isn't really a bombastic trade headline in my view as China has already retaliated with tariffs against the US, but it is just the mere sentiment of it.
As I've been highlighting since yesterday, all it takes is just one negative headline and things will start spiraling again. This is just a taste of that.
Now, WTO disputes are known to be rather lengthy so I'm not too familiar with how long this process will take. But in essence, even if it takes long, China will definitely figure out other ways to retaliate first if the US proceeds to introduce the $200 billion tariffs in due time.
I don't expect markets to hit the panic button just yet in all of this but it serves as a reminder that risk sentiment is still relatively fragile.
