The European session ended at near two-month lows, with US index sales continuing hourly. China responded to Trump's threats and took real action, depreciating the yuan to its weakest level in nearly a decade. Investors are resorting to safer assets, and today we are witnessing a strong rally in government securities.
The S & P500 continues its losing streak with its decline already within 5% of its last ATH and DJIA down more than 500 points. The VIX (Fear Index) has shot up today, up 21%, with 10-year government securities falling to 1.74%. The Chinese yuan sank below $ 7.
Demand for safe heaven assets is particularly strong today, with concerns that the China-US conflict will sharpen the yen and gold upwards, with gold going up to $ 1,500. Today's risk-off sentiment was also compounded by US industry data, which came out weaker in July. Bitcoin is trading at $ 11,800, seeing strong demand from China. Oil drops to close to $ 55 a barrel.
With today's move by the Chinese, fears of a currency war have also ignited.
Trump has made it clear on Twitter that the currency devaluation is pure manipulation that aims to hurt the world and the US economy.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
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