 Free fall in major government yields extended, and accelerated last week. Meanwhile, it seemed that stocks investors finally woke up with sharply deteriorating sentiments. Major indices staged steep decline as risk aversion heightened. The first factor being the "ever-present" US-China trade tensions. Hard-line rhetorics from official media blossomed after Xi urged his citizens to prepare for a "new long march" earlier in the month. And now China is also stepping counter-measures to US isolation of Huawei. Rare earth will be used to disrupt US industrial and tech supply chain. And a so called "unreliable entity list" will be set up. There are divided opinions on the effectiveness of China's moves but they're somewhat irrelevant. The key message is that there is no room for negotiations for now. Further, on Sunday, China is going to lay out its position on trade talks with the US in a white paper titled "China's Position on the China-U.S. Economic and Trade Consultations". Judging from the intensity of market reactions, Trump's suddenly move to tariff Mexican products had a more profound impact that unsettle global investor confidence. In short, in order to force Mexico to curb immigration flow through the country to US, Trump announced to impose 5% tariffs on all Mexican products on June 10. That will eventually move up to 25% on October 1 if he's not satisfied with what Mexico is going to do. That's an unprecedented move in using tariffs on issues unrelated to trade nor economy. That's beyond the scope of trade war and it's no longer just protectionism. It's weaponization of tariffs for political agenda. The net results were, over the week: DOW dropped -3.01%. S&P 500 dropped -2.62%. NASDAQ dropped -2.41%. DAX dropped -2.37%. CAC dropped -2.05%. FTSE dropped -1.59%. Nikkei dropped -2.44%. China Shanghai SSE surprisingly rose 1.6%. US 10-year yield dropped -0.182 to -2.142. 30-year yield dropped -0.169 to 2.583. German 10-year yield dropped to record low at -0.211 before closing at -0.20, down -0.086. In the currency markets, Yen was overwhelmingly the strongest one. It's surprisingly followed by the resilient Australian Dollar, and then Swiss Franc. Sterling was the worst performing one. Canadian Dollar was second worst, following steep decline in oil price. | 
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