The latest escalation in the trade war between the United States and China rattled global markets again on Wednesday, with Treasuries and the US dollar falling in a selloff of some US assets.
US stocks edged higher, however, led by gains in technology shares as investors weighed whether recent sharp selling may have been overdone, although trading remained choppy.
US President Donald Trump's 104% tariffs on China came into effect on Wednesday, prompting a swift retaliation from Beijing in the form of duties of 84% on US imports.
Benchmark 10-year US Treasury note yields jumped to a seven-week high on what appeared to be large liquidations of the debt, with trading volumes overnight totalling more than four times the average. Bond yields move opposite to prices.
An increase in yields during the Asian trading day increased fears that China may be offloading a large portion of its US bond holdings.
Demand for longer-dated debt is set to face a test with a $39 billion sale of 10-year notes on Wednesday afternoon and a $22 billion auction of 30-year bonds on Thursday.
The push out of Treasuries and the dollar – effectively the backbone of the global financial system – could be symptomatic of a broader loss in investor desire to hold US assets in general and "the end of an era," according to Deutsche Bank head of foreign exchange research George Saravelos.
Oil prices slipped on Wednesday, hitting fresh four-year lows before recovering some ground, after China announced additional tariffs on US goods in retaliation against Trump's tariff policy.
Brent futures were down $2.36, or 3.76%, to $60.46 a barrel at 1600 GMT.
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