Treasuries Rally; Chipmakers Hit by China Salvo: Markets Wrap

(Bloomberg) — Treasuries rallied as uncertainty over US President Donald Trump’s policies sparked a dash for havens. Bitcoin tumbled below $90,000.

Most Read from Bloomberg

Contracts on the S&P 500 and Nasdaq 100 steadied, erasing earlier losses that followed a jittery session on Wall Street Monday. ASML Holding NV and STMicroelectronics NV fell as Trump spelled out more measures to curb China’s semiconductor industry and urged allies to the same.

Bonds surged, pushing the yield on 10-year Treasuries down seven basis points to 4.33%, the lowest level in over two months.

Concern is growing over the new US administration’s policies, its impact on global growth and the fraying of long-established economic and political alliances. Trump signaled Monday that tariffs on Mexican and Canadian imports will go ahead. A split with the US and its allies over Ukraine deepened as Trump withdrew condemnation of Russia’s invasion three years ago.

“At the moment there’s a lot of uncertainty reigning in the background which is making it challenging for investors to navigate,” said Alexandra Morris, an investment director at Skagen AS. “The whole tariff discussion is the main negative catalyst.”

Bank of America Corp. has seen investor activity slow since the start of the year as clients grow wary over the impact of Trump’s policies. Jim DeMare, who leads the firm’s global markets division, warned that uncertainty was a “great deal higher.”

That’s sent investors into the havens of Treasuries and gold and out of more volatility-prone assets such as cryptocurrencies.

The VIX Index, a measure of volatility known as the “fear gauge,” touched its highest level this year at just below 20.

Nvidia Corp.’s earnings report on Wednesday could be yet another catalyst to unleash volatility given its outsized impact on the broader market.

“Bear in mind that the market impact of Nvidia’s results have often proved to be as significant as US jobs reports over the last couple of years,” Deutsche Bank AG strategist Jim Reid wrote in a note to clients.

A widely-watched gauge of the attractiveness of German debt fell to the most negative on record, reflecting expectations for higher borrowing to fund big outlays on defense spending.

The Hang Seng Tech Index had slumped as much as 4.4%, pacing losses for Chinese equities in New York. The gauge later erased most of its decline as more than $1 billion worth of money poured into Hong Kong stocks from China.

Trump officials recently met with their Japanese and Dutch counterparts about restricting Tokyo Electron Ltd. and ASML engineers from maintaining semiconductor gear in China, according to people familiar with the matter.

This comes after a directive set the stage for a more muscular use of the Committee on Foreign Investment in the United States, or CFIUS, a secretive panel that scrutinizes proposals by foreign entities to buy US companies or property, to thwart Chinese investment.

Key events this week:

US consumer confidence, Tuesday
Fed’s Lorie Logan, Tom Barkin, Michael Barr speak, Tuesday
Apple shareholder meeting, Tuesday
US new home sales, Wednesday
Nvidia earnings, Wednesday
Fed’s Raphael Bostic speaks, Wednesday
Eurozone consumer confidence, Thursday
US GDP, durable goods, initial jobless claims, Thursday
Fed’s Jeff Schmid, Beth Hammack, Patrick Harker, Michael Barr, Michelle Bowman speak, Thursday
Japan Tokyo CPI, industrial production, retail sales, Friday
US PCE inflation, income and spending, Friday
Fed’s Austan Goolsbee speaks, Friday