Trump’s tariffs causing a stir

Donald Trump’s threat to impose tariffs on a further $200bn worth of Chinese imports to the US (on top of the $50bn worth of imports on which the US administration is imposing tariffs) has caused a stir overnight, with equities, bonds and currencies all affected

Chinese equity markets are down around 4-5% while the Nikkei share index in Japan is off about 2%, with European stocks opening lower this morning and US indices set to do likewise this afternoon

Bond yields in the core markets are falling on a mini “flight to safety”. Benchmark US 10-year yields are down around 6bps from yesterday’s close to trade at 2.86, with equivalent German and UK yields about 4-5bps lower this morning at 0.36% and 1.27% respectively

On the currency markets, the yen has strengthened to under Y110 against the dollar, while the Swiss franc is also a touch firmer against the US currency. The euro has slipped, though, to trade below $1.16, as has sterling, to around $1.32, though the UK currency is broadly stable against the euro at about 87.75p (even as Theresa May loses another vote in the Lords on her government’s Withdrawal Bill)

Data due today includes constriction output in the UK and housing starts in the US