The current financial market is experiencing severe turbulence, as the Trump administration intensifies pressure on China, declaring a global tariff war, which has resulted in a strong negative impact on financial markets. The stock market has sharply declined, with the S&P 500 index dropping more than X% on the first trading day after the policy announcement, leading to a sell-off of blue-chip stocks. The U.S. Treasury market has also been affected, with the yield on 10-year Treasury bonds spiking to 4.5% in a short period, causing panic selling among investors and a significant drop in bond prices, tightening market liquidity. Click to enter the Binance KOL exclusive group (Join the group for benefits)
Gold expert Peter Schiff pointed out that the 10-year U.S. Treasury yield has reached a dangerous level. If the Federal Reserve does not implement quantitative easing (QE) in a timely manner, it could lead to a repeat of the 1987 'Black Monday' stock market crash. The MOVE index for the bond market has risen to 139.88, indicating extremely high expectations of uncertainty in the bond market. Experts warn that if the Federal Reserve does not cut interest rates or undertake large-scale asset purchases to stabilize the market, the global financial system will face systemic risks.
The primary market for U.S. Treasury bonds is in trouble. On Tuesday, the bid-to-cover ratio for a $58 billion three-year Treasury auction was far below expectations, with poor subscription results leading to pessimistic expectations for subsequent 10-year and 30-year Treasury auctions. The continued decline in long-term Treasury prices will impact global financial markets through various mechanisms, exacerbating issues such as the deterioration of financial institutions' balance sheets and rising corporate financing costs, potentially triggering systemic risks and hindering global economic growth. As a result, many international investors are shifting funds from the U.S. Treasury market to safer markets like German and Japanese bonds.
The news of China selling $50 billion in U.S. Treasury bonds has attracted global attention. As the second-largest holder of U.S. debt, this move has impacted the supply-demand structure of the U.S. Treasury market, pushing the yield on 10-year Treasury bonds to jump X basis points in a short time, also constraining U.S. economic policy. In recent years, China has continued to reduce its holdings of U.S. Treasury bonds while increasing its gold holdings, with gold reserves reaching [specific value], optimizing its foreign exchange reserve structure and reducing dependence on U.S. dollar assets.
In the foreign exchange market, the renminbi has recently depreciated continuously, with a cumulative depreciation of X% against the U.S. dollar over the past five trading days. The People's Bank of China has adjusted the formation mechanism of the renminbi's midpoint rate and intervened in the foreign exchange market, signaling its intention to stabilize the exchange rate. International gold prices are nearing $3,000 per ounce, and China has increased its gold holdings for three consecutive months, enhancing the stability of renminbi assets.
The economic competition between China and the U.S. has now entered a critical stage, with the Federal Reserve facing a tremendous challenge in stabilizing the financial market and economic growth, necessitating the formulation of effective monetary policies in the short term to address panic sentiment and stabilize the market. Global financial markets are closely watching the Federal Reserve's movements, hoping it can mitigate systemic risks, as the outcome of this competition will profoundly affect the global economic landscape.Click to enter the Binance KOL exclusive group
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