Multiple Trade Battles Will Keep Markets Under Pressure
Bonds are signaling that tensions will only escalate as the U.S. deals with China, the EU, Japan, Mexico and China.
Investors are beginning to realize that the trade wars may be around for longer than expected.
Photographer: Drew Angerer/Getty Images North AmericaGlobal stocks rebounded the last three days on optimism that maybe cooler heads will prevail before the trade wars get out of hand. That optimism is likely to be short-lived. Investors should not only expect to be buffeted repeatedly by tit-for-tat measures by the U.S. and China, but by global trade disputes on two other major fronts.
Such pessimism on the part of investors is reflected in demand for the ultimate risk-off assets, U.S. Treasuries and German bunds. The yield on 10-year Treasury notes hit an intra-day low of 2.36% Thursday, about the lowest since December 2017. Also substantiating investor preference for havens, the yield on 10-year German bunds fell this week to 0.136%, the lowest since September 2016.